IRS Issues Statement on New Plug-In Electric Drive Vehicle Credit (IRC 30D)

[Roy2001]

It's going to be really hard to say what the value on the lightning will do. When the Chevy and RAM come to market, what will their pricing and specs look like. How will that affect the value of the current lightning? Ford has already said there will be a next gen lightning for 2025. If this makes it to market on time. How will that affect 22/23 model trucks? Honestly if the residual value is of more importance than the utility value of the truck, and you get a truck this year or next, you are going to be best off immediately flipping it as you will most likely make a profit, possibly $15-20k or more if you factor in a tax credit.

I won’t worry 2022 Lightning residue value as my Lariat ER already appreciated for $16.6k due to price increase and $7500 tax credit.

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[petemill]

well off folks got a huge benefit because they had tax liability to offset the $7500 credit. Moderate/Low income people could only use a small fraction of the $7500 credit so it didn't have as much impact.

The current tax credit is refundable if it causes you to have overpaid taxes through the year (e.g. via withheld tax on paychecks, or quarterly self-employment tax). The minimum earning for a $7500 tax liability is about $54,000*. Seems like a fairly low wage, though it's above the pathetically low minimum wage. I agree in a perfect world it would be a smarter tax credit involving sales tax reduction, and refundable.

*Based on IRS marginal tax rates for a single person: (9950*.1)+((40525-9951)*.12)+((54000-40525)*.22). For a family it would be about $66,000 ((20550*.1)+((66000-20550)*.12)

 

[greenne]

The current tax credit is refundable if it causes you to have overpaid taxes through the year (e.g. via withheld tax on paychecks, or quarterly self-employment tax). The minimum earning for a $7500 tax liability is about $54,000*. Seems like a fairly low wage, though it's above the pathetically low minimum wage. I agree in a perfect world it would be a smarter tax credit involving sales tax reduction, and refundable.

*Based on IRS marginal tax rates for a single person: (9950*.1)+((40525-9951)*.12)+((54000-40525)*.22). For a family it would be about $66,000 ((20550*.1)+((66000-20550)*.12)

Ummm..no.it is not refundable in current form.

The only way you can claim full credit is if you had $7500 tax liability

https://www.capitalone.com/cars/lea...the-federal-tax-credit-for-electric-cars/1314

https://www.hrblock.com/tax-center/...6607858635035&referrer=https://www.google.com

 

[astricklin]

The current tax credit is refundable if it causes you to have overpaid taxes through the year (e.g. via withheld tax on paychecks, or quarterly self-employment tax). The minimum earning for a $7500 tax liability is about $54,000*. Seems like a fairly low wage, though it's above the pathetically low minimum wage. I agree in a perfect world it would be a smarter tax credit involving sales tax reduction, and refundable.

*Based on IRS marginal tax rates for a single person: (9950*.1)+((40525-9951)*.12)+((54000-40525)*.22). For a family it would be about $66,000 ((20550*.1)+((66000-20550)*.12)

That needs to be your taxable income. Your actual income needs to be higher. The standard deduction for 2022 is 12950 or 25900. So 67k for an individual or 92k for joint filing. Then account for pre tax payroll deductions for healthcare, social security, 401k or other things. Plus child deductions, probably home ownership deductions. To have an actual tax owed of $7500 you probably need to have a salary of over 100k (or pretty close to) for joint filing.

 

[petemill]

Ummm..no.it is not refundable in current form.

The only way you can claim full credit is if you had $7500 tax liability

I think the use of the word "refundable" is applying to 2 different definitions and I worry that some will not understand what applies for them. Yes it is refundable if you already paid more than $7500 federal tax in the year and you already paid that e.g. via your company paying the IRS directly via withholding as part of your regular paycheck. You would get a tax refund for the $7500 from IRS after you file your taxes. And no it's not "refundable" in that it cannot make the IRS owe you even if you did not pay any tax that year.

 

[greenne]

I think the use of the word "refundable" is applying to 2 different definitions and I worry that some will not understand what applies for them. Yes it is refundable if you already paid more than $7500 federal tax in the year and you already paid that e.g. via your company paying the IRS directly via withholding as part of your regular paycheck. You would get a tax refund for the $7500 from IRS after you file your taxes. And no it's not "refundable" in that it cannot make the IRS owe you even if you did not pay any tax that year.

I give up. Bottom line if at the end of the day you owe the IRS $7500 you can use the full credit of $7500. If you already paid this during the year, you get it back as the $7500 credit applies.

However if you only the owe the IRS $2000, you will can only apply $2000 to your tax bill..the other $5500 goes to waste. At no time will you get more back than you already paid. Its non refundable.

This has been described on here several times in great detail...

 

[Rando]

I think the use of the word "refundable" is applying to 2 different definitions and I worry that some will not understand what applies for them. Yes it is refundable if you already paid more than $7500 federal tax in the year and you already paid that e.g. via your company paying the IRS directly via withholding as part of your regular paycheck. You would get a tax refund for the $7500 from IRS after you file your taxes. And no it's not "refundable" in that it cannot make the IRS owe you even if you did not pay any tax that year.

I appreciate your intent, but I think you’re the only one here who is talking about tax refunds. A “refundable credit” and a “non-refundable credit” are well defined terms. I don’t think any of us here were worried about a tax refund. We are discussing the new bills affect on obtaining the full value of the credit against the taxes owed on taxable income.

Thus far it does not appear they have converted it to a refundable credit, which is a shame because the people making less than the necessary income to get the full credit are the ones that could use the full credit the most.

 

[greenne]

There is a mindset by some that huge tax refunds are a good thing. The irony is if you are getting a huge refund it means you gave the government an interest free loan for several months. People focus on the fact they are getting say $3000 back. They should be focused instead on the fact they paid $3000 more than they should have little by little throughout the year.

My opinion a smart tax strategy is to neither owe nor be owed a refund come Dec 31-- but that takes focus and experience.

Disclaimer: I am not endorsing any tax dodge methods nor am I am tax professional(although I played one many years ago)... this is just my opinion. Please seek a tax professional for advice.

 

[greenne]

I appreciate your intent, but I think you’re the only one here who is talking about tax refunds. A “refundable credit” and a “non-refundable credit” are well defined terms. I don’t think any of us here were worried about a tax refund. We are discussing the new bills affect on obtaining the full value of the credit against the taxes owed on taxable income.

Thus far it does not appear they have converted it to a refundable credit, which is a shame because the people making less than the necessary income to get the full credit are the ones that could use the full credit the most.

To be fair, we(or at least I) was discussing the implication of the refundability of the credit NOT refundability of taxes you paid already thru paycheck deductions.

I'm still not convinced it is NOT a refundable credit. I mean, it is after 1/1/2024 if you transfer your full credit to the dealer they *should* give you the full $7500 "cash on the hood". You should get that same benefit if you choose NOT to transfer to the dealer.

No where does it say it refundable, but to be fair the old guidance (2009) didn't say it was non-refundable and I don't remember the solar credit refundability(actually rollover) being discussed in the law..only in the IRS guidance.

I guess we'll see. I know it was the intent in early versions to make it useful by making it refundable, we'll see if Manchin threw us another curveball

 

[Rando]

To be fair, we(or at least I) was discussing the implication of the refundability of the credit NOT refundability of taxes you paid already thru paycheck deductions.

Right. That was the point I was making when I replied to Pete.

And I believe you’re right that we’ll have to wait for more guidance from IRS as thing move along. I’ve yet to find a source with a definitive answer. Everything appears to be speculation at this point.

 

[greenne]

Right. That was the point I was making when I replied to Pete.

And I believe you’re right that we’ll have to wait for more guidance from IRS as thing move along. I’ve yet to find a source with a definitive answer. Everything appears to be speculation at this point.

I know when it was contained in the BBB everyone was saying it was a refundable credit(despite not seeing it spelled out anywhere) so I am confident that was the intent.

But with Manchin being Manchin and totally cratering this thing, I would not be surprised if he totally threw a wrench in it just to be difficult.

It doesn't say in the law the credit is refundable, but I don't see how you could depend upon point of sale and it not become refundable.(Otherwise there would be the chance the dealers would lose money taking the credit from customers they couldn't use to offset their income).

 

[astricklin]

I guess I missed it originally,but I see the point of sale doesn't kick in until 2024....hmmm.
Here's hoping if I get to order a 2023 model that I take delivery in the fall (or later cause I'll order a pro).

 

[greenne]

I guess I missed it originally,but I see the point of sale doesn't kick in until 2024....hmmm.
Here's hoping if I get to order a 2023 model that I take delivery in the fall (or later cause I'll order a pro).

True..point of sale doesn't kick in until 2024....the *real* question is whether you can essentially accomplish the same thing by claiming a refundable credit for the full $7500 on your 2023 tax return.

If not..that would mean the credit in 2024 is substantially more valuable to low-mod income buyers in 2024 vs 2023.

 

[astricklin]

If not..that would mean the credit in 2024 is substantially more valuable to low-mod income buyers in 2024 vs 2023.

Aka me

And honestly even if the 2023 credit can be carried over / is refundable, having to initially finance the extra $7500/3750 could put a kink in the works for some people. Especially with cheaper vehicles like the bolt/leaf.

 

[Oneand0]

I did a reservation for my father and of course it’s in my name at this point for a 2023 Wave 1 Pro Order. In hindsight I wish I would have used his credit card back on May 19th with his name. I have already taken delivery of my Lariat and I placed his order on Aug 11th.

When it arrives at the dealer in 2023 it will be in the new EV rebate law. I make above the single 150k cap. Question is, when I’m filling out the paperwork for the truck, can I have his name on it too, as a co-owner? He’s literally paying for all of it. But, I know my name has to be on as the buyer since I reserved it. Has anyone done this, and if his name is on original paperwork, then he should be able to apply for the credit.!?

Thanks for any insight.

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