The IRS Is Making It Way Too Confusing To Buy An EV With Tax Credits

[cwstnsko]

I cant imagine Government doing something completely non-sensical and then executing it even more incompetently then the brain child itself. Shock of shocks….

I think the risky assumption here is that the government wants to provide tax credits as an incentive to purchase an EV. The way the law is written, it appears to me that the government wants to maintain the appearance of continued support for the electrification of transportation while paying out dramatically less in the way of consumer tax credits than they have in the past.
As soon as they engage the material sourcing requirements, the number of consumer tax credits for purchasing a vehicle will drop dramatically.
If they don’t fairly quickly close the commercial “loophole” the EV industry will shift back to a mostly leasing model like it was in the early 2010s.
Based on the way the law is written, it appears the government really wants us all to lease our EVs rather than buy them. I’m not sure why that would be advantageous, so perhaps it is just further evidence of their ineffectiveness in executing intent of the policy.

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[luebri]

so perhaps it is just further evidence of their ineffectiveness in executing intent of the policy.

Ding. Ding. Ding! We got a winner!

You talked yourself through it.

 

[RickLightning]

I think the risky assumption here is that the government wants to provide tax credits as an incentive to purchase an EV. The way the law is written, it appears to me that the government wants to maintain the appearance of continued support for the electrification of transportation while paying out dramatically less in the way of consumer tax credits than they have in the past.
As soon as they engage the material sourcing requirements, the number of consumer tax credits for purchasing a vehicle will drop dramatically.
If they don’t fairly quickly close the commercial “loophole” the EV industry will shift back to a mostly leasing model like it was in the early 2010s.
Based on the way the law is written, it appears the government really wants us all to lease our EVs rather than buy them. I’m not sure why that would be advantageous, so perhaps it is just further evidence of their ineffectiveness in executing intent of the policy.

No, they want to bring manufacturing, and material sourcing, back to the US or at least North America.

 

[cwstnsko]

No, they want to bring manufacturing, and material sourcing, back to the US or at least North America.

That’s a long-term kind of change. It will take most companies the better part of a decade to restructure their final assembly and battery manufacturing, possibly even longer to source raw materials differently.
It’s also another area where it is especially odd that this would be deemed important for consumer vehicles, but not for commercial vehicles.
I’m starting to think that other than the commercial loophole, Joe Manchin really effectively gutted the EV tax credit portion of this legislation, but people went along with it because the optics were good and the average consumer wouldn’t actually dig into the implications of all the conditions.

 

[greenne]

No, they want to bring manufacturing, and material sourcing, back to the US or at least North America.

If that were the case they would have a "phase in" of the manufacturing requirement to allow automakers to transfer ops here.

Also, without diving into politics..one Senator with interests in big oil managed to make the "incentives" so restrictive virtually no one can use them. That was his intention all along as he doesn't believe in EV credits (and has said so in public numerous times).

 

[GoGoGadgetTruck]

6 weeks???????

February 9th is next Thursday, I'm missing the humor.

The joke is that TurboTax usually isn't really "right" until mid-March or thereabouts.

 

[asianman35]

hopefully a silly question, to get the federal EV Charger tax credit (30% of your charger installation + charger price), does it have to be that you owe taxes? I'm not talking about liability, obviously you have to have a tax liability greater than the credit, but I thought I read somewhere that you have to be owing money to get that credit, otherwise it just 0's out and you dont get back anything? im hoping im wrong. Are there any EV related credits that work like that?

 

[sotek2345]

FYI to all - TaxAct seems to have all of the forms online and working. I was able to file this weekend and got the full credit for both the EV buy and the charging station.

 

[TaxmanHog]

hopefully a silly question, to get the federal EV Charger tax credit (30% of your charger installation + charger price), does it have to be that you owe taxes? I'm not talking about liability, obviously you have to have a tax liability greater than the credit, but I thought I read somewhere that you have to be owing money to get that credit, otherwise it just 0's out and you dont get back anything? im hoping im wrong. Are there any EV related credits that work like that?

These two credits (EV charging station and installation + The BEV credit) are NON-REFUNDABLE.

Meaning these credits will reduce your gross income tax and certain other taxes to zero.

Any unused credits will not be refunded to you.

In this particular example only your wage withholdings and estimated tax deposits will be refunded.

**to keep the example simple, I'm ignoring earned income credits which are refundable credits.

 

[asianman35]

These two credits (EV charging station and installation + The BEV credit) are NON-REFUNDABLE.

Meaning these credits will reduce your gross income tax and certain other taxes to zero.

Any unused credits will not be refunded to you.

In this particular example only your wage withholdings and estimated tax deposits will be refunded.

**to keep the example simple, I'm ignoring earned income credits which are refundable credits.

Oh ok, so lets say i make $150K and owe $35K in taxes, but throughout the year I've paid $40k in taxes, youre saying I WONT get the $7,500 money back ($5k overpayment + $7500)? or are you saying that if I only owe $5k in taxes, thatll go down to $0 and not -$2500?

 

[jimfigler]

hopefully a silly question, to get the federal EV Charger tax credit (30% of your charger installation + charger price), does it have to be that you owe taxes? I'm not talking about liability, obviously you have to have a tax liability greater than the credit, but I thought I read somewhere that you have to be owing money to get that credit, otherwise it just 0's out and you dont get back anything? im hoping im wrong. Are there any EV related credits that work like that?

The EV charger tax credit uses a different calculation to determine if you paid enough during the tax year. It takes in account other tax credits you are receiving as well. I was unable to take the EV charger credit with the $7500 credit from the vehicle. The same thing happened last year when I claimed my Kona EV. Turbo tax would zero the charger credit out as soon as I entered the $7500 vehicle credit. My wife and I for other reasons had to file separately and she was able to add the EV charger credit to her return. It wasn't a ton, I think it worked out to $200.

 

[Oneand0]

Oh ok, so lets say i make $150K and owe $35K in taxes, but throughout the year I've paid $40k in taxes, youre saying I WONT get the $7,500 money back ($5k overpayment + $7500)? or are you saying that if I only owe $5k in taxes, thatll go down to $0 and not -$2500?

I believe he’s just talking about the charging station credit, not the BEV credit. Different things.

 

[TaxmanHog]

Oh ok, so lets say i make $150K and owe $35K in taxes,

The fact that you have a GROSS TAX of 35k is all that matters, you will ~feel~ the effects of the credit and your over deposits will be refunded to you.

** that 35k is solely income tax?

&& you're NOT self employed?

 

[asianman35]

The fact that you have a GROSS TAX of 35k is all that matters, you will ~feel~ the effects of the credit and your over deposits will be refunded to you.

** that 35k is solely income tax?

&& you're NOT self employed?

correct, and the same would be for the Charging station credit? Just making sure I dont have to mess with my withholdings to make sure I owe vs. receive a refund, but it seems as long as my tax bill is > these credits, im fine. ill receive back my overpayment.

 

[TaxmanHog]

BTW.. each individuals tax picture can be vastly different.

Use an e-file application, accountant or CPA for projecting the impact of your 2023 taxes or input the information as it is on your 2022 filings currently in process to get an idea of how these credits will impact your situation.

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