Featured IRS instant tax credit for EVs, PHEVs, e.t.c.

I was just reading up on this.
There is a fair amount of discussion that, doing the transfer, people no longer need to have as much tax liability as the credit amount!
This would be phenomenal if true.

Other income restriction and manufacturer sourcing still apply.

 

Devil is always in the details. Best case in January and only if the selling entity has registered with the IRS. So no private sellers? Another favor to the dealer lobby?

 

Seems folks could get hosed if taxpayers have no tax debt to use the credit against.
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This is something that could happen.

Some say you won't have to have a tax liability.

The act says the only change is you can get the credit at the point of sale, but the previous rules still apply.

I guess it depends on how the IRS will interpret it. They could say you need a tax liability to go along with your point-of-sale credit. If your liability is less, you may owe the IRS at the end of the year. Not good!

Note that the point-of-sale credit is optional. If you don't go for it your situation is the same as in 2023, that is, you need to have a tax liability of $7,500 or more to get the full credit. Why would this not also apply to the early point-of-sale credit too?

 

The IRS has just published their guidance.

That seems pretty clear. Here is an article about it; Here's What Happens To The Federal EV Tax Credit On January 1, 2024 - CleanTechnica

Here is the department of the treasury news release: U.S. Department of the Treasury, IRS Release Guidance to Expand Access to Clean Vehicle Tax Credits, Help Car Dealers Grow Businesses | U.S. Department of the Treasury

And for those brave enough, here is the actual IRS guidance in all its legalese: https://www.irs.gov/pub/irs-drop/rp-23-33.pdf

 

I can envision this plan working at a tesla store / online sale point. BUT ... from experience ? Who hasn't experienced traditional slimy sales people muck up incentives ...
Often - when there's fed incentives &/or credits - suddenly there's an opportunity for unrestrained sales critters to jack the price up - at a rate similar to the incentive amount.
Hope it's not true ....
.

 

Dealerships definitely are going to be the weak points in this.
The regulations do have requirements that dealers declare, to the buyer, the MSRP, the amount of the rebate, and the price adjustment the customer gets due to the rebate (which needs to be equal to the rebate).
Failure to do this results in the Dealer’s loss of their “certificate”.

People should, as always, shop various dealers to try to insure they get a legit deal.
Some dealers may not be willing to do this. In that case, the customer should move on to one that will.

 

Somewhat clear:

This seems to be talking about the upper cap limit. But I still don't see anything that is 100% clear on whether there's a tax liability or not. There are no examples. What if I owe $2,000 in taxes at the end of the year?????? What then? Yes, I can claim the credit, that is 101% clear. But will I have to pay it back?????

What is an "elegible consumer?" If there is no more "tax liability" then why is there still an "it can be transffered regardless of tax liability?"

Apparently you can get it regarless of how much you make. But there still is a tax liability!? I'd like to see it it writing that "there is no tax liability. You can get the credit and you will not be asked to pay it back based on your taxes at the end of the year."

I don't like, "You can claim the credit regardless of a TAX LIABILITY that who knows why they keep including this term, but you have a TAX LIABILITY so keep that in mind since there's also talk about having to pay back the tax credit at the end of the year if you don't qualify."

 

Believe me, I empathize with your desire for more clarity.
From every source I have found so far, this does mean a buyers tax liability no longer matters. Just that their AGI isn’t above a certain threshold.

Regarding

That is in there because it is a change in the role tax liability played.

 

I understand it doesn't matter to get the credit applied at the point-of-sale. But nowhere does it say that you won't have to pay part of it back if your tax liability is less than the $7,500 or $4,000 amount.

I guess I'll believe it by around April 15, 2025 when people have done their taxes for 2024.

At any rate, it doesn't really help me personally all that much right now. The Bolt is going away until who knows when. So far there aren't any other EV's that in 2024 will be cheap enough that with the $7,500 or $4,000 tax credit, plus the Colorado incentive, become cheap enough for my $20,000 max budget, and that don't have some other downfall, like costing $400 per month to insure, except maybe a used BMW i3 like @bwilson4web suggests. I'm sure that would be a great car for climbing back up the mountains after our 600 mile trip back from the inlaws.

Maybe several years from now it will help me. Hopefully it helps lots of other people and that hopefully it is true that people can own less than the tax credit and still get the full credit and not have to pay any back.

 

Federal Tax Credits for Plug-in Electric and Fuel Cell Electric Vehicles Purchased in 2023 or After (fueleconomy.gov)

Federal Tax Credits for Pre-owned Plug-in Electric and Fuel Cell Vehicles (fueleconomy.gov)

Again, when it says things like, "Federal Tax Credit Up To $7,500!," that "up to" doesn't sound very promissing. If everyone that qualifies, qualifies for the full tax credit, why do they have to add "up to" in the description?

 

Because, the amount is variable. Depending upon where the battery is sourced, and where the car is built, the rebate could be $0, $3750 or $7000. Or in other words, “up to $7500”.

You seem to be incredibly resistant to imagining the possibility of good news

 

In 2024, in Colorado there will be a total of $7,500 of incentives besides the $7,500 federal tax credit. That's very good news. But it's also a huge risk if I'm not 100% sure I can get that.

Both the Tesla Model 3 and the VW ID.4 are $39,000. I can have $15,000 applied to those, so $24,000. That's still above my budget, but maybe I could stretch and try to get an EV, just because. But if I end up owing some $5,500 of the federal tax credit at the end of the year becase I based my purchase off of possible good news, I'd be up a river without a paddle to say the least! I'd have to declare bankrupcy!

 

Wah wah

 

So @bisco has just convinced me that yes, I can get the full tax credit! This is the first article to be clear and not seem to be based on rumors.

So I stand corrected! (Or sit corrected, I'm sitting right now as I type this.)

Thanks!

 

Check with some Chevy dealers, they might still be taking orders

 

That would be a dream come true! To get a Chevy Bolt for under $20,000 with the two incentives (Federal and State) that start on January 1, 2024!

 

I wouldn't use the term "owe" because I don't think it is the right term. Let's say you calculate your taxes and it comes out to $10,000 for the year (this would be your tax liability). But through your workplace withholding (or quarterly payments) you've already paid $9,000. On April 15(ish) you owe $1,000. You also could have overpaid during the year, for example $11,000 and the IRS owes you a $1,000 refund.
IMO, this is why they use the term tax liability everywhere.
Disclaimer: I'm not a CPA

Mike

 

I think we're saying the same thing, but I do see where I was perhaps wrong. Let me put it into a perspective more like my situation:

Say I pay $3,000 to the federal government for income taxes.
At the end of the year I do my tax return and find my tax liability is $2,500.
So the government gives me $500 back.

Now let's say, in a parallel universe, I pay also pay $3,000 to the federal government and also buy an EV.
With the EV I choose the point-of-sale option and get $7,500 off.
At the end of the year I do my tax return and find my tax liability is $2,500.
Let's say the government considers the $7,500 non-refundable, so $7,500 - $2,500 = $5,000 that I need to return to them.
So they keep my $3,000 and issue a bill of $2,000 that I owe to pay them back for the $7,500 they gave me.