[michaelefitzsimmons]

The IRS web page specifically says "The vehicles must be acquired for use or lease and not for resale. "

So seems like it'd be questionable/a violation of the tax credit guidelines. .https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

I'd only throw my 2 cents in here by saying, not just the legal/spirit of the federal tax credit at issue in this, but dude...do you really want to mess with the Feds/IRS? Me, no way. I took the $7500 credit and went on my way...

 

[JAussieman]

This is very true. Most people do not understand how the tax credits work and that this particular one is non-refundable. To the best of my knowledge, it does not carry forward to future years either. So if you only had $6,500 in tax liability for the year, then you would be able to utilize $6,500 from the tax credit and the other $1,000 would be lost (assuming just a single credit for an EV is used).

This differs for instance from the federal tax credit for installing a residential solar energy system. I believe that one can be carried forward for up to 20 years, so if you couldn't use it all in the first year, you would have the opportunity to utilize the full value of the credit over multiple years as needed.

So I have a question about the Tax liability that must be shown when submitting your 2022 tax return.
Assume 1. A fully qualified vehicle Mustang MachE was delivered and registered to drive in March of 2022, to the person who ordered the same from Ford.
Assume 2. I am preparing my 2022 Tax year return in April of 2023.
Does this mean that after preparing your tax return (and prior to Form 8936 credit) you must have a liability and owe the Feds at least $7,500?
Or can you have a tax return that shows your withholding in 2022 was sufficient to meet any Fed Tax obligation that might have arisen and yet still in fact get a refund back of $7,500

I have heard that unless you actually have a Tax liability you cannot use the Tax credit. Meaning that you can’t get a refund if you have overpaid taxes after taking into account the credit for BEV.

If you have to show a tax liability – then I'm gonna have to reduce my current year withholding. That doesn’t seem right that you actually have to owe the Fed Government on your tax return an amount greater than $7,500 after taking into account all tax payments made in 2022. in order to get the tax credit.

 

[ChuckyA]

I purchased my Premium in July, 2021 totaled the car in Oct 2021, brought a GT in November 2021....do you think I am eligible for two tax rebates?

Yes

 

[StanzE]

Hey friends, Question.

I was lucky enough to have someone who ordered a car ahead of me not take delivery. So I took it off the dealers hands. But when i was doing the purchase the salesperson said i still have my spot in line if i want it for the car i originally ordered.

So I kept my place and am expecting that car comes in the next couple months. When it arrives, wouldn't i likely be able to sell the current car for MSRP or even a small premium, take both the rebates and ultimately end up with the color/build i want, not to mention a 15k tax credit?

I realize a loophole and not technically how the system was set up and certainly feel bad about taking advantage, but seems like a no brainer. i know you can take multiple rebates as long as you have the tax liability (i do) and the tax hit for the new car is like 6k, so less than the rebate. Plus I got like 2500 dealer rebates as well as a CA state rebate

I can't even find any 2022's for sale and i know the premium isn't even available to order anymore so have to imagine someone would buy it for 5k over as long as it is only in my possession for a month or two and i don't put any miles on it.
Is there something i'm missing here?

The rebate is only good for one time purchase and is not available for used cars.

 

[sr71bbjd]

The rebate is only good for one time purchase and is not available for used cars.

 

[sr71bbjd]

Hey friends, Question.

I was lucky enough to have someone who ordered a car ahead of me not take delivery. So I took it off the dealers hands. But when i was doing the purchase the salesperson said i still have my spot in line if i want it for the car i originally ordered.

So I kept my place and am expecting that car comes in the next couple months. When it arrives, wouldn't i likely be able to sell the current car for MSRP or even a small premium, take both the rebates and ultimately end up with the color/build i want, not to mention a 15k tax credit?

I realize a loophole and not technically how the system was set up and certainly feel bad about taking advantage, but seems like a no brainer. i know you can take multiple rebates as long as you have the tax liability (i do) and the tax hit for the new car is like 6k, so less than the rebate. Plus I got like 2500 dealer rebates as well as a CA state rebate

I can't even find any 2022's for sale and i know the premium isn't even available to order anymore so have to imagine someone would buy it for 5k over as long as it is only in my possession for a month or two and i don't put any miles on it.
Is there something i'm missing here?

This is all about you. You wanting to scheme to make a profit. That was clear when you wrote “feel bad about taking advantage, but it seems like a no brainer”. And you want to scam a system put in place to help people switch to EVs. Glad I don’t count you as a friend….

 

[StanzE]

Unless you are in a state that waives the sales tax for a BEV, I do not see how it makes sense to buy a MachE and try to flip it for a profit.

If we assume a 7% sales tax, and a cost of $50,000 your cost will be $53,500 less tax Federal tax credit of $7,500 for a net cost of $46,000.

To sell at a profit you would have to get more than $46,000 at least $48,500: to me to go through all the bother and uncertainty of a future sale for less than $2500 would not be worth my while.

If a person is willing to wait he can get a new one for the same price you paid, $46,000.

Thus you asking for a premium of $2,500 for a used car vs. a new car.

Seems highly pragmatic and unlikely to me that someone to save time would pay a premium on a used car vs. a new car of $2,500. I for one would never pay more for a used car than a new car..

Just my $.02:

The buyer of that used car cannot claim the $7,500.

 

[gv932n]

Well, if you have just stated you are purchasing it for resale and not for personal use it clearly violates one of the eligibility rules to qualify for the rebate. Just read the instructions for Form 8936. So it is not a loophole as a loophole is generally legal and is a circumstance which the authors of the law did not foresee. The burden of proof would be on you to show otherwise. That's the way I interpret the rules….sounds like greed to me.

Hey friends, Question.

I was lucky enough to have someone who ordered a car ahead of me not take delivery. So I took it off the dealers hands. But when i was doing the purchase the salesperson said i still have my spot in line if i want it for the car i originally ordered.

So I kept my place and am expecting that car comes in the next couple months. When it arrives, wouldn't i likely be able to sell the current car for MSRP or even a small premium, take both the rebates and ultimately end up with the color/build i want, not to mention a 15k tax credit?

I realize a loophole and not technically how the system was set up and certainly feel bad about taking advantage, but seems like a no brainer. i know you can take multiple rebates as long as you have the tax liability (i do) and the tax hit for the new car is like 6k, so less than the rebate. Plus I got like 2500 dealer rebates as well as a CA state rebate

I can't even find any 2022's for sale and i know the premium isn't even available to order anymore so have to imagine someone would buy it for 5k over as long as it is only in my possession for a month or two and i don't put any miles on it.
Is there something i'm missing here?

I find no problems with your logic, if you realize the IRS is a credit, not a rebate. If your taxes owed are greater than $15,000 then you are indeed a lucky man. You should have no trouble selling the car, but the person buying might not pay a premium because he won't get the IRS credit.

 

[ChuckyA]

The buyer of that used car cannot claim the $7,500.

That’s not what he said. The used car buyer of course can’t take the tax credit.

He said the net cost to him was $53k less $7.5k, so if he sold it for more then $46k he broke even. At $48.5k he would have a $2.5k profit.

 

[Basjak]

Hey friends, Question.

I was lucky enough to have someone who ordered a car ahead of me not take delivery. So I took it off the dealers hands. But when i was doing the purchase the salesperson said i still have my spot in line if i want it for the car i originally ordered.

So I kept my place and am expecting that car comes in the next couple months. When it arrives, wouldn't i likely be able to sell the current car for MSRP or even a small premium, take both the rebates and ultimately end up with the color/build i want, not to mention a 15k tax credit?

I realize a loophole and not technically how the system was set up and certainly feel bad about taking advantage, but seems like a no brainer. i know you can take multiple rebates as long as you have the tax liability (i do) and the tax hit for the new car is like 6k, so less than the rebate. Plus I got like 2500 dealer rebates as well as a CA state rebate

I can't even find any 2022's for sale and i know the premium isn't even available to order anymore so have to imagine someone would buy it for 5k over as long as it is only in my possession for a month or two and i don't put any miles on it.
Is there something i'm missing here?

Really??? Why post this in first place, to show the type person you are? Take advantage of a loop hole, really?

 

[Tell It Right]

So I have a question about the Tax liability that must be shown when submitting your 2022 tax return.
Assume 1. A fully qualified vehicle Mustang MachE was delivered and registered to drive in March of 2022, to the person who ordered the same from Ford.
Assume 2. I am preparing my 2022 Tax year return in April of 2023.
Does this mean that after preparing your tax return (and prior to Form 8936 credit) you must have a liability and owe the Feds at least $7,500?
Or can you have a tax return that shows your withholding in 2022 was sufficient to meet any Fed Tax obligation that might have arisen and yet still in fact get a refund back of $7,500

I have heard that unless you actually have a Tax liability you cannot use the Tax credit. Meaning that you can’t get a refund if you have overpaid taxes after taking into account the credit for BEV.

If you have to show a tax liability – then I'm gonna have to reduce my current year withholding. That doesn’t seem right that you actually have to owe the Fed Government on your tax return an amount greater than $7,500 after taking into account all tax payments made in 2022. in order to get the tax credit.

I believe your conflating a tax liability with owing the IRS. Those are two different things, though the latter almost always depends on the former.

Tax liability = the amount you should have paid throughout the year.
What you owe = Tax liability - what you paid (through your paycheck deductions)

So you can be getting a refund from the IRS and still have had a large tax liability (refunded because you paid more in tax from your paychecks throughout the year than you should have).

 

[ChuckyA]

I believe your conflating a tax liability with owing the IRS. Those are two different things, though the latter almost always depends on the former.

Tax liability = the amount you should have paid throughout the year.
What you owe = Tax liability - what you paid (through your paycheck deductions)

So you can be getting a refund from the IRS and still have had a large tax liability (refunded because you paid more in tax from your paychecks throughout the year than you should have).

It’s tough for a non-accountant to understand the difference. I suggest we leave the explanation to the tax professionals.

What I suggest for those using software that do their own tax planning, copy your 2021 tax return, name it 2022 Est,, change all Federal WlH figures to $0, change income levels as applicable. This will provide you with your estimated tax liability before the tax credit. Note that self-employment tax is not included in income tax liability for this purpose.

 

[JTK44]

It’s tough for a non-accountant to understand the difference. I suggest we leave the explanation to the tax professionals (for a fee).

Here is a stab at it:

Tax liability is what you owe IRS from your income. That income can be from wages, selling of securities, your house or withdrawals from your IRA plus many other sources.

During the year you may have satisfied part of all of this liability by withholding or quarterly payments. If you over withheld or over paid you quarterly estimates when you file your tax return you are entitled to a refund. If under you owe taxes.

That is the difference between tax liability and owing taxes.

The Federal Tax credit for BEV , $7,500 is a credit against TAX LIABILITY. It reduces your tax liability- regardless of whether you are entitled to a refund or owe money.

As posted numerous times to get the full $7,500 credit you need at least $7,500 in tax liability.

Hope this clarifies

 

[Tell It Right]

It’s tough for a non-accountant to understand the difference. I suggest we leave the explanation to the tax professionals (for a fee).

Another way to say it. If you look at your 1040 form for 2021 on line 24 (Total Tax) and that's at least $7,500, then if you had bought an EV in year 2021 you would have received the full $7,500 credit (assuming it's an EV that gets the $7,500 credit) --- basically line 24 would have been reduced by that amount. That's unrelated to the lines below that that can basically be summarized as: "Okay, now that we determined how much tax he should have paid (tax liability), let's see how much he paid already to determine if he gets a refund or owes us sumthin'". If nothing has changed in your tax situation I'd count it safe to say year 2022 will look a lot like 2021 tax-wise.

This is my first time buying an EV. But it's not the first time I analyzed ahead of time tax credits (or for that matter debits) and my tax situation to determine if I'd get the tax credits/debits and if so, how much my refund would be and, therefore, how much I wanted to monkey with my W-4 form to change my withholding to try make my overall refund somewhat close to zero. That's pretty much what I did last year after I installed my solar system: determining ahead of time I'd get $8,400 in the "solar tax credit", nothing else in our tax situation was changing, so I both adjusted my W-4 form and converting some of my wife's traditional 401K to her Roth IRA with the result being that our overall refund this year was $721. I'll count that as close enough to a zero refund will all that activity.

After years of putting kids through college and sometimes getting a tax credit and other times getting a tax debit, and hating loaning broke/corrupt government for free only to get it refunded back with them expecting us to pretend we should be grateful, you get used to how to work it.


Bonus points: If you get an EV this year (reducing your tax liability by $7,500) then next year you can adjust your W-4 form, bigly reducing how much is taken out in taxes, and as long as you still gave to the IRS by the end of the year the total tax liability for year 2022, then you won't be charged the underpayment penalty for year 2023. You'll still owe the IRS, but it would be the equivalent of the IRS giving you a free loan. That kind of situation doesn't happen often, but a once every blue moon situation like buying an EV and getting a credit for it is the kind of situation that's easy to calculate this (as long as nothing else in your tax situation changes in the year following). I've done that kind of thing in the past, like when my youngest kid finished college (no more college tax credits), the next year I gave less to the IRS than I "should have" (because my tax liability would be back to normal with no college credit), put the difference aside from each paycheck into a simple investment account in the PRWAX mutual fund, then when I filed my taxes in April I wrote a check to the IRS with money from the taxable investment account and still had investment earnings on top of that that I transferred into my wife's Roth IRA (she's older, so retirement money in her name will pass the age 59.5 rule before retirement money in my name will).

 

[ChuckyA]

Here is a stab at it:

Tax liability is what you owe IRS from your income. That income can be from wages, selling of securities, your house or withdrawals from your IRA plus many other sources.

During the year you may have satisfied part of all of this liability by withholding or quarterly payments. If you over withheld or over paid you quarterly estimates when you file your tax return you are entitled to a refund. If under you owe taxes.

That is the difference between tax liability and owing taxes.

The Federal Tax credit for BEV , $7,500 is a credit against TAX LIABILITY. It reduces your tax liability- regardless of whether you are entitled to a refund or owe money.

As posted numerous times to get the full $7,500 credit you need at least $7,500 in tax liability.

Hope this clarifies

I just retired after 48 years as an accountant at varying levels. I myself know what you were saying. Sorry I wasted your time.

See my addendum where I added my suggestion for doing a pro-forma 2022 tax return. This is what I did during 2021, and it told me to convert an IRA to Roth before 12/31 to create liability, and then contribute to an IRA to reduce liability. I got to within $1k. Sounds like you did the same thing.

 

[me-stang]

I agree with VegasWeezy. But keep in mind, these tax credits are non-refundable. You have to have a tax bill in excess of the $15,000 to receive both rebates. I am a professional tax preparer and had a client a few years back that was expecting the full $7,500 and because his tax bill was only around $4,500 that was all he received.

Your the pro, and I understood the tax credits as you explained it as well, but TurboTaxing; it the counter showed me owing $5K at the time of electric car question and then getting a $2.5K rebate after answering yes question. I didn't expect that, but submitted it that way and the feds accepted it and have issued the refund. Think they'll come looking for their $2.5K eventually?

 

[JTK44]

Your the pro, and I understood the tax credits as you explained it as well, but TurboTaxing; it the counter showed me owing $5K at the time of electric car question and then getting a $2.5K rebate after answering yes question. I didn't expect that, but submitted it that way and the feds accepted it and have issued the refund. Think they'll come looking for their $2.5K eventually?

Again whether you are entitled to a refund or owe money is not the critical question - unless you owe $7,500 or more. If you owe $7,500 or more, you will get the full Federal tax credit.

The critical question is your TAX LIABILITY: If after tax deductions, etc. you owe $7,500 or more, then the Federal Tax credit of $7,500 will be applied against your tax liability dollar for dollar.

For example, if your tax liability is $5,000 and you have made no payments during the year, then Turbo Tax will show you owe $5,000. $5,000 is your tax liability: The Federal Tax credit will be limited to $5,000 and you will not get a refund.

If your tax liability is $7,500 and you have made $2,500 in payments, Turbo Tax will show that you owe $5,000. You will then get the full Federal Tax Credit of $7,500: $5,000 will offset the amount your owe and $2,500 will offset the $2,500 you have paid and you will get a refund of $2,500.

Again the Federal Tax Credit of $7,500 is applied to your TAX LIABILITY. To get the full benefit of $7,500 you must have a tax liability of $7,500 or more.

Hope this clarifies.

PS: If your tax liability is $25,000 and Turbo tax shows that you owe $5,000 then you will get the Full Federal Tax credit of $7,500: $5,000 will offset the amount Turbo Tax says you owe and the balance of $2,500 will reduce your tax liability by $2,500 hence you will get a $2,500 refund.

Another way to look at it: Against you tax liability of $25,000 you have paid $20,000 and Turbo Tax says you owe $5,000. When you apply the Federal Tax credit of $7,500 you adjusted Tax Liability has been reduced to $17,500. As you have paid $20,000 you are entitled to a refund of $2.500.

 

[ChuckyA]

Your the pro, and I understood the tax credits as you explained it as well, but TurboTaxing; it the counter showed me owing $5K at the time of electric car question and then getting a $2.5K rebate after answering yes question. I didn't expect that, but submitted it that way and the feds accepted it and have issued the refund. Think they'll come looking for their $2.5K eventually?

So many people get confused by tax withholdings and refunds. Make a duplicate of your TurboTax return, change all tax withholdings to $0, delete all estimated tax payments applied to your 1040, and delete the tax credit form. The result will be your tax liability before the credit. Simple.

 

[JTK44]

So many people get confused by tax withholdings and refunds. Make a duplicate of your TurboTax return, change all tax withholdings to $0, and delete the tax credit form. The result will be your tax liability before the credit. Simple.

Plus you must delete any estimated payments as well to get your tax liability or just look on line 24 of your 1040.

 

[ChuckyA]

Plus you must delete any estimated payments as well to get your tax liability or just look on line 24 of your 1040.

Correct..I edited my original comment.