Forums

An additional $25,000 tax DEDUCTION for an X...if you qualify...Thanks IRS !!!

An additional $25,000 tax DEDUCTION for an X...if you qualify...Thanks IRS !!!

I have not seen this topic posted, but it has recently made the network and online news

Just Google "$25000 rebate for heavy vehicles", there are even some specific to Model X

http://www.autoblog.com/2015/10/07/tesla-model-x-25000-tax-break/

http://www.latimes.com/business/autos/la-fi-hy-tesla-tax-break-20151013-...

I am not an accountant, but mine confirms that the purchase of any vehicle with a Gross Vehicle Weight Rating aka GVWR (not curb weight) over 6000 lbs purchased by a business owner, self-employed,recipient of a 1099, etc qualifies for an tax credit of $25K in the year of purchase. Even if the car was delivered on Dec 31, 2015 it will qualify for the year 2015. In fact, even the purchase of a pre-owned vehicle applies.

It is according to the IRS Tax Code Section 179 that this is possible. https://www.irs.gov/publications/p946/ch02.html

It does not have to be a vehicle used only for business purposes, not in reality at least.

It initially was designed to provide assistance for farmers for the purchase of heavy equipment, but it is available to all who qualify.

I have introduced this topic to many car salesman who had no idea that this was a significant selling point for a large SUV.

I present this only to help others to take advantage of this tax benefit, as all of us can benefit from a little help.

AlMc | 21. oktober 2015

@Wait4: Thanks for starting this thread. It is another reason for people to consider purchasing an X. While I am not in favor of this 'loophole' in the tax code I am in favor of anything that helps people take advantage of an EV over an ICE.

DarthB | 21. oktober 2015

I have a full time job (employed) but I also own another LLC--can I still do this by putting the car under the LLC I own, or does the "business owner" part needs to be full time income? For sure I will check with my accountant but just want to see if anyone here is in the same boat and have some general idea. Thanks.

Tâm | 21. oktober 2015

@DarthB

I don't know about accounting at all but logically this is a business tax break, not a personal tax break.

It is the company, not owner of a company who gets the tax break.

So it shouldn't matter whether you get paid by the company or not.

What counts is does the company owns it?

Once the company owns it, of course you can drive it if you like.

johnse | 21. oktober 2015

@WaitN4myX

Please change the title to $25,000 Tax Deduction.

The tax loophole is a Deduction, not a Credit.

This is a common piece of misinformation that the blogs and the press (who probably got it from the blogs) have been spreading.

The deduction reduces the taxable income of the business. Your accountant will inform you of whether this applies to all your income or just that of the business (which will vary based on what form of business it is. Therefore, the reduction of taxes "tax credit" is only a percentage of the $25,000 deduction.

chuck | 21. oktober 2015

The last answer is correct...it's a tax deduction which reduces taxable income; it is not a tax credit which would directly reduce your income tax liability.

There are several limitations. First, one must consider that a portion of the car's usage is personal. Therefore, if the business use is 60%, the Sec 179 depreciation deduction is capped at $15,000. (60% x $25,000.) Second, the current year deduction cannot exceed the business income. Any unused portion can be carried forward.

If the corporate owner is a C Corp, the deduction stays within the corp.

If it's an S Corp, the deduction flows thru to the shareholder's 1040.

If the owner is a 1099 person, they can reduce the 1099 income on Sch C to zero.

If the owner is a W-2 employee, the deduction is taken as an itemized deduction on Form 2106 (Sch A) subject to a 2% deductible of their income.

BTW, my license plate is IADDMUP.

GLO | 21. oktober 2015

Great info. Fortunately my self employed hubby will be buying our Model X. This is great news!

MyXinTx | 21. oktober 2015

I fully agree with the correct term being a Deduction, and not a Credit, but when I went to change the title of the thread, there was a message indicating that would create a new thread. If anyone has a better understanding of this, please let me know.

Again the purpose was to create awareness to helps others.

@Chuck and @Johnse You are the Wizards, thanks for the clarification.

MyXinTx | 23. oktober 2015

Correction in the title updated...Thanks to all for the feedback

rossRallen | 23. oktober 2015

Tesla has listed the gross vehicle weight in the VIN number of my Model X as Class E, 6001-7000 pounds, so the deduction should be evaluated if you're a business owner.