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

[flyct]

Thank you for reply. Hope CA won't charge tax as well.

For #2, I can transfer soon or later right?

This link may help
https://www.dmv.ca.gov/portal/vehicle-registration/titles/title-transfers-and-changes/

Transfer a Vehicle Between Family Members
To transfer a vehicle between family members, submit the following:

• The California Certificate of Title properly signed or endorsed on line 1 by the registered owner(s) shown on the title. Complete the new owner information on the back of the title and sign it.
• A Statement of Facts (REG 256) for use tax and smog exemption (if applicable).
• Odometer disclosure for vehicles less than 10 years old.
• Transfer fee.

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[Roy2001]

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.

This is only true for now but NOT for 2024!

 

[FirstF150InCasco]

This is only true for now but NOT for 2024!

Enjoy the truck.

 

[FirstF150InCasco]

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.

That answers my original question! Thank you!!

 

[flyct]

What "new tax rebate policy"? 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. …………

Tax credit doesn’t have anything to do with withholding or W-2. For those of us filing a 1040, tax liability on form 1040/line 18 needs to be over $7,500 to collect full tax credit. If it’s less than $7,500 then the amount on line 18 is all you will qualify for, regardless of whether you withheld $7,500 or not.

I am retired and I bought 2 EVs that qualify for full tax credit since January 2023, plus had a $1,000 expense to purchase Tesla Wall Charger and have it installed.. That’s $15,000 for 2 car credits and it’s $300 for charger tax credit for a total of $15,300.

My taxable income this year will not generate enough tax liability on line 18 to exceed $15,300. So today I took a partial withdrawal on my 401k to generate enough income so my tax liability would be just over $15,300. So I’m getting every penny I paid to the IRS so far this year in withholding back as a refund In April.

When I talked to my accountant buddy today he agreed with the strategy and said go for it. In his words he said “it’s free money”.

 

[Txxthie]

Tax credit doesn’t have anything to do with withholding or W-2. For those of us filing a 1040, tax liability on form 1040/line 18 needs to be over $7,500 to collect full tax credit. If it’s less than $7,500 then the amount on line 18 is all you will qualify for, regardless of whether you withheld $7,500 or not.

I am retired and I bought 2 EVs that qualify for full tax credit since January 2023, plus had a $1,000 expense to purchase Tesla Wall Charger and have it installed.. That’s $15,000 for 2 car credits and it’s $300 for charger tax credit for a total of $15,300.

My taxable income this year will not generate enough tax liability on line 18 to exceed $15,300. So today I took a partial withdrawal on my 401k to generate enough income so my tax liability would be just over $15,300. So I’m getting every penny I paid to the IRS so far this year in withholding back as a refund In April.

When I talked to my accountant buddy today he agreed with the strategy and said go for it. In his words he said “it’s free money”.

The government and some states provide incentives to drive EVs, but most still buy ICE. The main reason I feel is ignorance. Not knowing about EVs or even how to qualify for incentives. Next year will be different for better or worse.

Everyone’s tax situation is different. You consulted with your tax accountant and that was smart.

 

[TaxmanHog]

In his words he said “it’s free money”.

This phrase irks me to no end, we're all paying incrementally more for these "FREE" benefits.

 

[flyct]

I thought I read that for the federal EV rebate you have to own it for a year?

I’m pretty sure that’s not accurate. There’s no requirement that you keep it for a year as far as I know. Last year I sold a 2023 Nissan Leaf back to the dealer 3 months after I bought it and I claimed the tax credit. Totally legit according to my tax accountant friend.

The only time limit that I’m aware of deals with used EVs. Once you file and claim the $4000 used credit you cannot claim another for another. 3 years.

 

[Zprime29]

I’m pretty sure that’s not accurate. There’s no requirement that you keep it for a year as far as I know. Last year I sold a 2023 Nissan Leaf back to the dealer 3 months after I bought it and I claimed the tax credit. Totally legit according to my tax accountant friend.

The only time limit that I’m aware of deals with used EVs. Once you file and claim the $4000 used credit you cannot claim another for another. 3 years.

Cannot claim the credit if you buy with the intent to sell it inside a year, I think that's the rule. Not sure how "intent" is defined. Things happen, opinions change, as long as you've got a good excuse in case you get audited then probably ok.

 

[flyct]

Cannot claim the credit if you buy with the intent to sell it inside a year, I think that's the rule. Not sure how "intent" is defined. Things happen, opinions change, as long as you've got a good excuse in case you get audited then probably ok.

I searched the IRS rule for a requirement starting that you must keep car for any period of time but I couldn’t find it. As I stated the only thing I found similar was for used car credit limit once every 3 years.

The only thing similar in the rule is you must buy it for your own use, not for resale.

Last year before selling my 3 month old Leaf back to the dealer I checked with my tax accountant friend who told me there was no time limit to keep the car. The only reason I sold it back in 3 months was to replace it with a Tesla after their price drop.

If anyone has found reference to a requirement to keep the car for a year please post the link.

 

[Zprime29]

@flyct My best guess is that 1 year is being propagated as the time frame in which the IRS *may* flag the sale as worthy of investigation. As long as there's nothing to make it look like you bought it to flip it, then all is good.

 

[Txxthie]

The OP intends to personally benefit from the purchase of the vehicle by using his son's financial status to qualify for a credit. Why does a year make a difference before transferring ownership? Is it just hoping that enough time has passed for any scrutiny?

I don't believe there are mandatory time requirements when selling a vehicle by the original owner who qualified for the EV tax credit. The purpose of the EV tax credit is to get more EV's on the road.

 

[Zprime29]

The OP intends to personally benefit from the purchase of the vehicle by using his son's financial status to qualify for a credit. Why does a year make a difference before transferring ownership? Is it just hoping that enough time has passed for any scrutiny?

I don't believe there are mandatory time requirements when selling a vehicle by the original owner who qualified for the EV tax credit. The purpose of the EV tax credit is to get more EV's on the road.

They (the govt) don't want people buying, claiming the credit, then selling it at full price and pocketing the tax credit. That's why it says you have to purchase for personal use, not resale. Yes, I think the 1 year is generally accepted as a time frame to show that you didn't intend to resell the vehicle. As pointed out, there is no hard time frame, that's just a general notion. The IRS can audit for whatever reason they want. In the OP situation, I don't think it's relevant, since a transfer is not a resale and it's still for personal use.

 

[Roy2001]

The OP intends to personally benefit from the purchase of the vehicle by using his son's financial status to qualify for a credit. Why does a year make a difference before transferring ownership? Is it just hoping that enough time has passed for any scrutiny?

Yes that's the potential incentive to me. Ownership transfer does not matter, my son is under my insurance coverage anyway.

 

[flyct]

I had a similar situation. I ordered a Ford F-450 with X-Plan about $6000 below MSRP. My situation changed and I may not buy it. These are rare trucks and dealers are still adding $10,000-$15,000 over sticker. I asked if my friend who also is X-Plan qualified can buy it with X-Plan price. I was told no, it had to be purchased by the person whose name is on the order (name matching).

So if I bought it I would have to pay the sales tax of about $6,000. Then selling it to friend they would also be taxed about another $6,000. The dealer’s solution was for BOTH of us to buy it (co-own) and 30 days later remove my name from the title. No way I want my name on a truck that someone else is driving.

I think father/son co-owning and son taking the tax credit would work. Then at some later time remove the son from the title. This would only work if there was no loan.

Earlier this year I transferred our Lexus to our married adult daughter who lives in a different Florida city. We both went to DMV together and did the transfer sales tax free.

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