F-150 Lightning EV Tax Credits & Rebates - Discussions & Predictions

[metroshot]

You have to have $7500 in tax liabilities to be eligible for that tax credit.

Yup, have that every single year thanks to side business...

Each year I wait till the end of the tax due date to file.
But if I get the Lightning using Ford Options, I will be filing the first of January!

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[Sdctcher]

Yup, have that every single year thanks to side business...

Each year I wait till the end of the tax due date to file.
But if I get the Lightning using Ford Options, I will be filing the first of January!

Good Answer.

But I worry for many who do not understand that right now (unless Congress passes a bill this year and makes changes) the amount you will owe in federal income taxes for 2022, payable in 2023, is your total Lightning Tax Credit, up to a maximum of $7,500.

Of course, state rebates/credits will be in addition.

If you will owe $1,000 on your tax return to be filed in 2023, your credit will be $1,000, NOT $7,500.

With the Covid Economy lately, many are paying less taxes. You really have to understand this tax credit Shell Game.

If your dealer sells you your Lightning for $50,000, that is what you pay Now.

You have to wait up to a year to get a credit back.

I, like you, am a business owner (Farm/Rental Income) who uses accounting tools to project income/expenses/tax liabilities into the future.

 

[RidetheLightning]

Its a lot to consider....that may be why Ford is dragging its feet on the pricing scheme..trying to see where Congress goes with this.

I *really* hope they pare down the base MSRP for different models and make a lot of options options vs. standard on these models to make tax credits apply to more trim levels. If you're listening, Ford, I really want Max Recline but need my tax credit to justify it - if I can't get it, I'm going to have to go way down the trim level list and just get a more basic trim level.

 

[JDD]

Good Answer.

But I worry for many who do not understand that right now (unless Congress passes a bill this year and makes changes) the amount you will owe in federal income taxes for 2022, payable in 2023, is your total Lightning Tax Credit, up to a maximum of $7,500.

Of course, state rebates/credits will be in addition.

If you will owe $1,000 on your tax return to be filed in 2023, your credit will be $1,000, NOT $7,500.

With the Covid Economy lately, many are paying less taxes. You really have to understand this tax credit Shell Game.

If your dealer sells you your Lightning for $50,000, that is what you pay Now.

You have to wait up to a year to get a credit back.

I, like you, am a business owner (Farm/Rental Income) who uses accounting tools to project income/expenses/tax liabilities into the future.

Your tax liability is the total amount of tax on your income minus any non-refundable credits such as child tax credit, dependent care credit to name a few.

This can also include additional taxes like self-employment tax, household employment tax, and tax penalties such as the 10% early distribution penalty for IRAs.

If your tax withholdings, estimated tax payments, tax credits etc. fell short of your tax liability for the year, the unpaid difference is the tax you owe.

And if your withholdings and payments exceeded your tax liability, the difference is your tax refund.

I see many people get confused by the difference between tax liability and taxes owed. I am not saying you are confused about your own situation. I was just making a general observation.

 

[JTmass]

Your tax liability is the total amount of tax on your income minus any non-refundable credits such as child tax credit, dependent care credit to name a few.

This can also include additional taxes like self-employment tax, household employment tax, and tax penalties such as the 10% early distribution penalty for IRAs.

If your tax withholdings, estimated tax payments, tax credits etc. fell short of your tax liability for the year, the unpaid difference is the tax you owe.

And if your withholdings and payments exceeded your tax liability, the difference is your tax refund.

I see many people get confused by the difference between tax liability and taxes owed. I am not saying you are confused about your own situation. I was just making a general observation.

Here's something I'm not sure about.

If my wife and I have a tax liability of 15000 for the year and we pay 18000 then our refund is 3000.

So if I apply the 7500 EV credit, it reduces our tax liability to 7500 (15000-7500=7500) for the year.

Does that mean our refund goes up to 10500? 18000 tax paid - 7500 liability = 10500 refund.

 

[JDD]

Here's something I'm not sure about.

If my wife and I have a tax liability of 15000 for the year and we pay 18000 then our refund is 3000.

So if I apply the 7500 EV credit, it reduces our tax liability to 7500 (15000-7500=7500) for the year.

Does that mean our refund goes up to 10500? 18000 tax paid - 7500 liability = 10500 refund.

Yes! It doesn't matter how much you owe on your tax return when you file it. The issue is whether you have enough taxable income after subtracting your deductions and exemptions from your adjusted gross income to result in a tax liability of $7500 or more to offset the non refundable credit. You don't need to owe any of it.

This would all be simpler if the EV credit was immediate at point of sale, and favorable to the consumer / tax payer.

 

[biers]

Yes! It doesn't matter how much you owe on your tax return when you file it. The issue is whether you have enough taxable income after subtracting your deductions and exemptions from your adjusted gross income to result in a tax liability of $7500 or more to offset the non refundable credit. You don't need to owe any of it.

This would all be simpler if the EV credit was immediate at point of sale, and favorable to the consumer / tax payer.

This is correct. This is my 4th EV/PHEV forum I’ve been on. This is always confusing for people.

 

[greenne]

Disclaimer: Although I do my own taxes and did work for one year as a tax consultant, I am NOT a tax professional. Do not take anything below as official advice. If unsure, always consult a tax professional.
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There are ways you can temporarily increase your liability in 2022(or 2023) so you can take advantage of the full $7500 (if it stays the same and is not modified by congress).

One way could be to donate less to your Traditional IRA and more to a Roth IRA.(So you don't have that deduction--more taxable income) You may choose to rollover a Traditional IRA to a Roth IRA so you have the liability in 22/23 vs in future years. You could also choose to wait on some tax deductible expenses until 2023(vs 2022). Going further, You may wish to donate to a Traditional IRA this year(2021), only to roll it over in 2022(or 2023) to a ROTH so you are effectively paying less tax this year and MORE next year.

Of course you would want to time this so it happens in the year you take delivery of the Lightning. If you were to increase your liability in 2022 and not get your lightning until 2023..then its a moot point.

Of course this all changes if congress modifies the EV tax credit..or if Ford sells 200,000 before you get yours.

 

[JTmass]

The more I run the numbers the more I realize that the tax incentives need to pass or I'm gonna have to tap out on the Lightning. Like.. yes I'm in love but man if the pricing matches the survey pricing, the ICE hybrid seems like a better value. Just sucks bc I want to be fully electric for clean driving.

 

[Peanutsparisinsyrup]

The more I run the numbers the more I realize that the tax incentives need to pass or I'm gonna have to tap out on the Lightning. Like.. yes I'm in love but man if the pricing matches the survey pricing, the ICE hybrid seems like a better value. Just sucks bc I want to be fully electric for clean driving.

Same boat here, our plan would be to get a model Y this year and then the F150 hybrid next. It sucks because it just brushes up against too expensive for someone that doesn't need (but optionally could use from time to time) the bed and towing (even if short range). That's the weird Achilles heel of this entire thing. The incentives make that an easier decision.

 

[sotek2345]

Same boat here, our plan would be to get a model Y this year and then the F150 hybrid next. It sucks because it just brushes up against too expensive for someone that doesn't need (but optionally could use from time to time) the bed and towing (even if short range). That's the weird Achilles heel of this entire thing. The incentives make that an easier decision.

I guess it depends what trim you are looking at, but the SR Pro is well under the price of a model Y, even ignoring any incentives.

 

[pstansel]

My bigger interest isn't the tax liability (plenty of that sadly) it is the MSRP. CT has a program to credit $2500 for EVs under 43k. And another 2k if you are low income but that doesn't help me. Ironically that cap excludes the most popular models actually bought in CT like Teslas. So even if the fed cap stays at 7.5k if I can get a decent truck for under 43k I'll be looking at 33k instead which rocks.

 

[Sdctcher]

Disclaimer: Although I do my own taxes and did work for one year as a tax consultant, I am NOT a tax professional. Do not take anything below as official advice. If unsure, always consult a tax professional.
-----------
There are ways you can temporarily increase your liability in 2022(or 2023) so you can take advantage of the full $7500 (if it stays the same and is not modified by congress).

One way could be to donate less to your Traditional IRA and more to a Roth IRA.(So you don't have that deduction--more taxable income) You may choose to rollover a Traditional IRA to a Roth IRA so you have the liability in 22/23 vs in future years. You could also choose to wait on some tax deductible expenses until 2023(vs 2022). Going further, You may wish to donate to a Traditional IRA this year(2021), only to roll it over in 2022(or 2023) to a ROTH so you are effectively paying less tax this year and MORE next year.

Of course you would want to time this so it happens in the year you take delivery of the Lightning. If you were to increase your liability in 2022 and not get your lightning until 2023..then its a moot point.

Of course this all changes if congress modifies the EV tax credit..or if Ford sells 200,000 before you get yours.

I am retired for some years and had put money into my 403b for years tax free when I was in a 12% tax bracket. I had hoped to pull it out when old at a low tax rate but now my farm and rentals (and creeping inflation) boosted me up to 19%!

So, what I am doing is pulling out enough in 2022 to make my tax due payable in 2023 at about $7,500. The money I am pulling out goes for the Lightning. That is one way to do it. If you have a business there is also the possibility of spreading out the $7,500 tax credit over a number of years. **

**Again - a question for your Accountant**

 

[greenne]

I guess it depends what trim you are looking at, but the SR Pro is well under the price of a model Y, even ignoring any incentives.

The thing with me is I could easily see myself using the Lighting as a commuter vehicle, whereas an ICE(on even hybrid f150) I couldn't see that happening due to cost. So for some people-- they may get away with not having the need for a commuter car if they were to buy a a Lightning, whereas they would not/could not do that with a regular pickup

Example: 10,000mi of commuting per year in the Lightning(assuming 2mi/KwH) == [email protected] electric rate == $667/yr. If you were to try that with an ICE f150....say 17mpg@$3.25 gal == $1912/yr.

You'd STILL come out ahead even if you compared it to an ICE commuter car getting 34mpg.

Just my thoughts...

 

[greenne]

I am retired for some years and had put money into my 403b for years tax free when I was in a 12% tax bracket. I had hoped to pull it out when old at a low tax rate but now my farm and rentals (and creeping inflation) boosted me up to 19%!

So, what I am doing is pulling out enough in 2022 to make my tax due payable in 2023 at about $7,500. The money I am pulling out goes for the Lightning. That is one way to do it. If you have a business there is also the possibility of spreading out the $7,500 tax credit over a number of years. **

**Again - a question for your Accountant**

Again, consult a tax professional, but it is my understanding that if you are eligible age wise you could choose to withdraw the 403b money, pay taxes on it and either use it for the lightning OR put into another investment.

If you cannot withdraw without penalty(age wise..usually under 59/half)..you could rollover your money to "roth" like retirement investment pay taxes on it(increased tax liability) and continue until you need it later on. (No penalty if you are not withdrawing the money..only switching to another retirement acct).

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