Transfer from my son to myself, do I need to pay tax in CA?

[TaxmanHog]

Maybe I'm just not getting it, but the "text" above the video seems to say the opposite:
Quote: "The EV tax credit doesn't work by owing money. It works by having having enough taxable income to qualify. If you W2 Federal withholding on your pay stub shows $7500 or more, you will qualify for the full tax credit." Also, "...some believe they can get it without having enough taxable income. The government will "recapture" whatever you don't qualify for and also be subject to a 20% penalty." My take of this is that you need to have $7,500 in tax liability to get the credit (which is not new.)

That would my and several others "interpretation" but then we have a CONFLICT in law and policy subject to suit, stay tuned.

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[Roy2001]

Can you provide more details about the "new" tax rebate policy (where you do not need to owe $7,500 in tax to claim it)? Where / when did this change? Can you provide details (a link would be great.) Thank you.

You really don't need to get involve in any details. All you need is to know that your family taxable income is below $300k.

If so, you just purchase the EV, dealer/Tesla/Rivian would deduct $7500 for you. That's it.

 

[Roy2001]

It’s too simple that is the problem!
Government will also chase you if you don’t have enough tax liability. Many people are going to end up in payment plans in 2025 repaying EV tax credits + possible penalties to the government.

That is NOT for year 2024 and after.

Right now you need to make sure you pay more than $7500 federal tax to claim it back but not any more after new year.

 

[TaxmanHog]

That is NOT for year 2024 and after.

Right now you need to make sure you pay more than $7500 federal tax to claim it back but not any more after new year.

I believe Txxthie's point is .... that if the current interpretation and statements in the FAQ goes sideways, IE the policy directive is reversed by a successful suit against the government, then enforcement actions {additional assessments & collections] would occur in calendar year 2025 onward as the accounts reconciliations occur.

 

[chl]

My son is in college and he could buy an EV with $7500 off next year thanks to new tax rebate policy that he does not need to owe $7500 tax to claim it.

Now my question is, if he is going to buy a Lightning and transfer it to me, do I need to pay tax (again)?

Best to consult a tax atty or CPA.

No offense, but be aware that if the purpose of this arrangement is to avoid tax or get a credit you are not entitled to, then it may run afoul of the law.

The question is, why is he buying it and transferring it to you? Is it because YOU wouldn't qualify for the credit and would have to pay back the $7500 when you file? Then you two may have committed a federal crime, maybe a state crime too.

And besides the new law seems to say you wouldn't have to pay it back IF you buy it on or after Jan 2024 if your income is too high.

Is $7500 worth committing one or more felonies? Not in my book anyway. And it could cost you guys a whole lot more than $7500!

See: https://www.irs.gov/pub/irs-utl/tax_crimes_handbook.pdf

 

[FirstF150InCasco]

You really don't need to get involve in any details. All you need is to know that your family taxable income is below $300k.

If so, you just purchase the EV, dealer/Tesla/Rivian would deduct $7500 for you. That's it.

Sorry. Not true.

 

[Roy2001]

Sorry. Not true.

It is true after new year.

 

[FirstF150InCasco]

It is true after new year.

You just cannot say $300k in income. That's at the start of the tax form. What's important is what is at the end of the tax form, namely the amount of tax you owe; you must owe $7500 in tax.

 

[Roy2001]

Best to consult a tax atty or CPA.

No offense, but be aware that if the purpose of this arrangement is to avoid tax or get a credit you are not entitled to, then it may run afoul of the law.

The question is, why is he buying it and transferring it to you? Is it because YOU wouldn't qualify for the credit and would have to pay back the $7500 when you file? Then you two may have committed a federal crime, maybe a state crime too.

And besides the new law seems to say you wouldn't have to pay it back IF you buy it on or after Jan 2024 if your income is too high.

Is $7500 worth committing one or more felonies? Not in my book anyway. And it could cost you guys a whole lot more than $7500!

See: https://www.irs.gov/pub/irs-utl/tax_crimes_handbook.pdf

Thanks for reminding. If this is going to happen, every step is LEGAL. My son would buy one to drive for one year and give it to me. So it is NOT ILLEGAL.

 

[Txxthie]

Best to consult a tax atty or CPA.

No offense, but be aware that if the purpose of this arrangement is to avoid tax or get a credit you are not entitled to, then it may run afoul of the law.

The question is, why is he buying it and transferring it to you? Is it because YOU wouldn't qualify for the credit and would have to pay back the $7500 when you file? Then you two may have committed a federal crime, maybe a state crime too.

And besides the new law seems to say you wouldn't have to pay it back IF you buy it on or after Jan 2024 if your income is too high.

Is $7500 worth committing one or more felonies? Not in my book anyway. And it could cost you guys a whole lot more than $7500!

See: https://www.irs.gov/pub/irs-utl/tax_crimes_handbook.pdf

Unfortunately some tax attorneys are not well versed on EV tax credits, or at least the ones I have consulted. The law is continually changing year to year, which only adds to the confusion.

Why cant OP co-own the vehicle and the son gets the credit, which is taken off at the point of sale. If it’s a cash deal it’s even cleaner. Both are relatives and live in California. This option only works if there is trust with both parties.

 

[Roy2001]

Why cant OP co-own the vehicle and the son gets the credit, which is taken off at the point of sale. If it’s a cash deal it’s even cleaner. Both are relatives and live in California. This option only works if there is trust with both parties.

I suspect it won't work to co-own the vehicle and let one party to claim.

 

[Txxthie]

Thanks for reminding. If this is going to happen, every step is LEGAL. My son would buy one to drive for one year and give it to me. So it is NOT ILLEGAL.

You should be subject to tax because it’s above the gifting allowance. It’s legal for him to buy and get the credit if he qualifies, but after that is where you plan falls apart. Why not just co own vehicle and avoid any potential tax implications by transferring ownership?

 

[Txxthie]

I suspect it won't work to co-own the vehicle and let one party to claim.

Why not? As long as both parties aren’t each getting credits,.

 

[TaxmanHog]

You should be subject to tax because it’s above the gifting allowance.

https://www.irs.gov/instructions/i709

 

[Zprime29]

You just cannot say $300k in income. That's at the start of the tax form. What's important is what is at the end of the tax form, namely the amount of tax you owe; you must owe $7500 in tax.

https://www.f150lightningforum.com/...-do-i-need-to-pay-tax-in-ca.16936/post-341308

It's in black and white. Starting in 2024 one only needs to meet the income threshold and transfer the credit to an eligible dealer.

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