U.S. Federal Tax Credit Question

[whitex]

I can't answer these, and I know you weren't asking me. I will say, though, that:
- the gov't (legislative) prints the law, and is not in the business of interpreting it - which is what a calculator would do

Agreed, legislative branch writes the law, judicial branch interprets them, and the executive (under whom IRS falls) enforces them.

I can't answer these, and I know you weren't asking me. I will say, though, that:

- there are "point in time" aspects of this law, which would be difficult to capture (or evaluate) in an online tool, or, worse, could be interpreted to provide false assurances; e.g.: point of assembly could shift for an i4 from Dingolfing (?) to SC, or the battery %/content could shift from abroad to US. I don't see how an online evaluator could keep track of these aspects, and they are essential for calculating the new net incentive.

I think your above statements contain the answer for most people wondering whether or not you will get any of the US EV manufacturer incentive (like the OP in this thread). That answer seems to be "nobody knows for sure until the car is delivered, then you claim the rebate, and it either gets accepted or rejected, with possibility of appeals through the judicial branch all the way up to the Supreme Court, should they accept it".

The answer gets simpler for individuals who fall outside of the income next year and who are buying EV's next year - it's a plain "not eligible". How excluding higher income bracket customers helps incentivize US manufacturing is beyond me, but I'm sure politicians found a way. The fact that more expensive cars are excluded seems more clear, the bill clearly aims to not incentivize expensive car manufacturing in the USA - let other countries manufacture expensive high tech stuff.

(shrug) It's what it's.

Very true. I've switch to that thinking long ago. I don't want to change the world, because I can't. I just work around whatever the world is. Hence I even stopped voting, last election I didn't want to have either of the candidates being elected on my conscience (I guess I fall in the ~60% of US population who do not support either of the two parties).

The new law (inflation reduction act) got different phases.

In 2025 or 26 (forgot the exact year ), IRS intend publishing a tool which will be used by dealers to verify vehicle qualification and apply the tax credit at the time of the purchase . Buyer doesn't need to wait till the following year to claim.

So only 2 or 3 years of ambiguity, assuming of course this even gets done at all as this timeframe falls in the next presidential term, meaning a new administration could change or even scrap it too. Or is the reason for 2025/2026 timeframe because there are no cars which expect to qualify for the incentives until then?

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[whitex]

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Thank you. The second EV meets the North American assembly requirement which is the only one that matters between 8/16 and 12/31/22 according to the IRS. MSRP and income limitations don’t kick in until next year.

Great, my deposit was a little under 5%, with the damages limited to it per contract. I wonder how this is going to work with all the Rivian deposits ($100 IIRC) which became non-refundable as this act passed in an attempt to qualify for the old rules.

Did the IRS define yet what final assembly in NA means? Does installing any missing parts by the dealer in the USA which are required in order to sell the car (e.g. 12V battery, TMPS sensors required by the government, etc) count? I presume just PDI won't count.

 

[btaback]

Great, my deposit was a little under 5%, with the damages limited to it per contract. I wonder how this is going to work with all the Rivian deposits ($100 IIRC) which became non-refundable as this act passed in an attempt to qualify for the old rules.

Did the IRS define yet what final assembly in NA means? Does installing any missing parts by the dealer in the USA which are required in order to sell the car (e.g. 12V battery, TMPS sensors required by the government, etc) count? I presume just PDI won't count.

They did. See attached. As you might have expected, Taycan is not on the list.

And for those that are curious, after speaking with multiple tax pros it appears that taking the credit for multiple vehicles is possible in 2022 as long as all qualifications are met. This will change in 2023 when the one per household limit goes into effect as part of the new rules from the 9 year extension of the original program. Clearly, there are different interpretations of these rules as is true with many things IRS so YMMV but I’m certainly going to try.

 

[Mr.Smith]

If your dealer is willing to say you have a binding contract before August 16th, than you're fine. Most dealers are scared to do this

I know a very large dealer in California that's been doing it on the EQS SUV that just started delivery. They also have an Audi dealership that they are doing it on the E-Tron GT.

 

[Satiger]

They did. See attached. As you might have expected, Taycan is not on the list.

And for those that are curious, after speaking with multiple tax pros it appears that taking the credit for multiple vehicles is possible in 2022 as long as all qualifications are met. This will change in 2023 when the one per household limit goes into effect as part of the new rules from the 9 year extension of the original program. Clearly, there are different interpretations of these rules as is true with many things IRS so YMMV but I’m certainly going to try.

OP said 'assuming I qualify '. I'm going with the assumption that he made sure that the new purchase after 08/19 meets both his income bracket as well EV manafacturing requirements per the guidance. His question was if one can take more than one EV tax credit per year .

Pre & post 08/19 tax credit laws states only one EV credit per ' tax filing'. In other words, if a married couple filing jointly , two individuals in one tax filing , only one EV tax credit is allowed .

Now, if they file separately and purchased EVs on their respective names (assuming EVs qualify) , both filing are qualified for tax credit . Under this circumstances, each got to evaluate if the additinal $7500 fed tax credit is worth giving up the advantage of filing married . For me, filing jointly gives better tax break than filing separately just for one additional EV credit .

Each tax conditions vary . It's best to consult with a 'qualified' tax professional.

 

[Satiger]

If your dealer is willing to say you have a binding contract before August 16th, than you're fine. Most dealers are scared to do this

I know a very large dealer in California that's been doing it on the EQS SUV that just started delivery. They also have an Audi dealership that they are doing it on the E-Tron GT.

Yeap. And the binding contract is subjected to State judiciary limits, remain to be seen how IRS could enforce that .....

 

[btaback]

Pre & post 08/19 tax credit laws states only one EV credit per ' tax filing'. In other words, if a married couple filing jointly , two individuals in one tax filing , only one EV tax credit is allowed .

Thanks for your feedback. Can you please provide a source for this info? I’ve not seen anything indicating this. Form 8936, which I believe is the correct form for filing for the credit has space for two vehicles and additionally states “Use a separate column for each vehicle. If you need more columns, use additional Forms 8936 and include the totals on lines 12 and 19.” I feel like I must be missing something.

 

[Satiger]

Thanks for your feedback. Can you please provide a source for this info? I’ve not seen anything indicating this. Form 8936, which I believe is the correct form for filing for the credit has space for two vehicles and additionally states “Use a separate column for each vehicle. If you need more columns, use additional Forms 8936 and include the totals on lines 12 and 19.” I feel like I must be missing something.

Its worth noting the the same form is used by business too.

Here it it : https://www.bankrate.com/loans/auto-loans/electric-vehicle-tax-credit/#whatis

I will try to get the IRS usage of one per filing later.

 

[fgwinn]

Apparently the old rules were too simple (tax credit based on battery size, up to 200,000 cars produced from a manufacturer with a clear phase out plan), which lead to an average citizen being able to understand them, so the politicians fixed it [for] us....

....Or is it that the government itself doesn't understand its own rules, so the IRS will just use a magic 8-ball to determine eligibility.....

I think the IRS understands the rules. They published the definition of a "written binding contract" the day after Biden signed the IRA into law. If they had published the 5% deposit rule prior to August 16th a lot more Taycan owners could have taken the necessary action to get the credit under the transition rules.

 

[Mr.Smith]

I think the IRS understands the rules. They published the definition of a "written binding contract" the day after Biden signed the IRA into law. If they had published the 5% deposit rule prior to August 16th a lot more Taycan owners could have taken the necessary action to get the credit under the transition rules.

Dealers need to be flexible about this. They can always say there was a 5% deposit. Some dealers are doing this

 

[fgwinn]

Dealers need to be flexible about this. They can always say there was a 5% deposit. Some dealers are doing this

I wonder if having the VIN number of your trade-in on the sales agreement would qualify as > 5% deposit.

 

[fgwinn]

....I know a very large dealer in California that's been doing it on the EQS SUV that just started delivery. They also have an Audi dealership that they are doing it on the E-Tron GT.

I believe the EQS SUV qualifies if you take delivery prior to 31-Dec-2022 even without a sales agreement in place prior to 16-Aug. The only requirement for the remainder of this year is assembly in North America (unless the 200000 production limit exceeded).

 

[Mr.Smith]

I believe the EQS SUV qualifies if you take delivery prior to 31-Dec-2022 even without a sales agreement in place prior to 16-Aug. The only requirement for the remainder of this year is assembly in North America (unless the 200000 production limit exceeded).

What about the $80k cap on SUVs? Either way the same dealer is back dating Etron GTs which don't qualify for the rebate

PS what a stupid methodogy on rebates that we need a group of people to figure out.

 

[fgwinn]

What about the $80k cap on SUVs? Either way the same dealer is back dating Etron GTs which don't qualify for the rebate

PS what a stupid methodogy on rebates that we need a group of people to figure out.

The $80K cap does not apply until 2023.

 

[whitex]

I think the IRS understands the rules. They published the definition of a "written binding contract" the day after Biden signed the IRA into law. If they had published the 5% deposit rule prior to August 16th a lot more Taycan owners could have taken the necessary action to get the credit under the transition rules.

It seems IRS added whole lot of their own conditions on what "binding contract" means, which were never in the signed law, e.g. the 5% figure and damages being limited. Unless there are other laws somewhere on the books which set those conditions as the legal definition of a binding contract, then it could be challenged in court. IRS does not get to write its own laws, they only enforce them. The courts are there to interpret them if there is any ambiguity. How difficult would it be to convince 12 jurors that "binding contract" without any clarifier means you cannot get your deposit back, vs. "you must lose at least 5% of the total"?

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