U.S. Federal Tax Credit Question

[btaback]

Hi guys,
I've done some reading and found some conflicting info so I'm hoping you can help clarify for me. I took delivery of my Taycan this past June. I'm considering buying another EV imminently. Assuming the basic qualifications are met, will I be able to claim the credit for both vehicles purchased in 2022?

Thanks!

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[masmole]

Hi guys,
I've done some reading and found some conflicting info so I'm hoping you can help clarify for me. I took delivery of my Taycan this past June. I'm considering buying another EV imminently. Assuming the basic qualifications are met, will I be able to claim the credit for both vehicles purchased in 2022?

Thanks!

You'll be able to claim the credit for the Taycan purchased in June but any EV you purchase on or after August 16, 2022 will be subject to the qualifications mentioned on the Inflation Reduction Act, which has limitations based on income, car price, car origin of assembly, etc.

 

[btaback]

You'll be able to claim the credit for the Taycan purchased in June but any EV you purchase on or after August 16, 2022 will be subject to the qualifications mentioned on the Inflation Reduction Act, which has limitations based on income, car price, car origin of assembly, etc.

Thank you for your response. I was under the impression that the only change for 2022 was the requirement for final assembly in North America and that the other restrictions (income, price) don't kick in until 2023.

 

[FlyingPoint]

Generally, these questions are best put forth to your CPA. FWIW, the last individual I would rely upon is an EV car sales person.
I am a practicing CPA and the rules are not so straight forward for a lay person becoming expert on Google to understand.
Every EV credit seeking taxpayer has to ascertain that they will qualify under the (not so much) Inflation Reduction Act.

 

[btaback]

Generally, these questions are best put forth to your CPA. FWIW, the last individual I would rely upon is an EV car sales person.
I am a practicing CPA and the rules are not so straight forward for a lay person becoming expert on Google to understand.
Every EV credit seeking taxpayer has to ascertain that they will qualify under the (not so much) Inflation Reduction Act.

I don’t think I anyone is suggesting that a car salesperson should be your source for tax info. But again, the question is not about the qualifications, it is about whether (if qualified) it is possible for one person (or a couple filing jointly) to claim credits on 2 EVs in the same year.

 

[PanameraFrank]

I don’t think I anyone is suggesting that a car salesperson should be your source for tax info. But again, the question is not about the qualifications, it is about whether (if qualified) it is possible for one person (or a couple filing jointly) to claim credits on 2 EVs in the same year.

Yes, you can claim 2 EVs in one year if they qualify (MSRP limit, assembled in the US) & your income qualifies. Your Taycan qualifies as it was before any changes, depends on your 2nd EV.

 

[Redhot2474]

First one yes. Second one no, you missed the

 

[Deleted member 6348]

Yes, to Taycan that you bought in June.

Most Taycan buyers will exceed the income limits under the new law. So, even if you found an EV that qualifies, your income will be too high to qualify.

 

[btaback]

​

Yes, you can claim 2 EVs in one year if they qualify (MSRP limit, assembled in the US) & your income qualifies. Your Taycan qualifies as it was before any changes, depends on your 2nd EV.

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.

 

[whitex]

I am a practicing CPA and the rules are not so straight forward for a lay person becoming expert on Google to understand.

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 us.

Even with complicated qualification rules the government could have just publish an online wizard which applies the rules based on a few questions, then tells the taxpayers whether the car qualifies and for how much. But imagine the chaos that would cause in society if taxpayers could actually get straight answers from their government. You gotta keep the populous in the dark, right? 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. It should save taxpayer money on training all the new IRS agents they will be hiring.

I suspect tax rules are heading the way of anti-trust laws - there is no way for even the best law firms in the country to tell you with certainty what is legal and what is not, the only sure fire way is to do it and see if the government charges and manages to convict you.

 

[WasserGKuehlt]

This is getting borderline political but ok: the old rules were meant to "bootstrap" production of EVs - whether by a new manufacturer or an established one - it defrayed the cost difference of an EV vs its ICE equivalent. The new rules are aimed more at "bootstrapping" _US_ EV production/industry - jobs, lithium/battery materials and production etc. and it has a short timeline to make people (== companies) move quickly. In some regards, you could say it's already working _in the direction it was aimed at_.

As I recall, some forum participants worked on that article of the law, its phrasing, and its provisions for transitioning/grandfathering. I get your comment is mostly tongue-in-cheek, but I sincerely doubt anyone is out to frustrate the consumer. It's trying to influence the economy/business decisions, and that's ... not easy.

 

[whitex]

This is getting borderline political but ok: the old rules were meant to "bootstrap" production of EVs - whether by a new manufacturer or an established one - it defrayed the cost difference of an EV vs its ICE equivalent. The new rules are aimed more at "bootstrapping" _US_ EV production/industry - jobs, lithium/battery materials and production etc. and it has a short timeline to make people (== companies) move quickly. In some regards, you could say it's already working _in the direction it was aimed at_.

As I recall, some forum participants worked on that article of the law, its phrasing, and its provisions for transitioning/grandfathering. I get your comment is mostly tongue-in-cheek, but I sincerely doubt anyone is out to frustrate the consumer. It's trying to influence the economy/business decisions, and that's ... not easy.

Good point about the new incentives no longer being about electrification of cars, but rather bootstraping the US industry. I still don't get why not create a simple wizard online, enter your income, select the car you're buying, your astrological sign, and/or whatever information the rules make the credit dependent on, then tell the taxpayer whether or not the car is eligible and for how much. Is the government just too incompetent, explicitly wants to keep the taxpayer from knowing, or did the fancy wording resulted in such ambiguity that there isn't anyone in the government who can consistently and authoritatively interpret the law? Perhaps you have another reason why are not willing to make it simple for an average taxpayer.

Last but not least, if it's all to incentivize manufacturers, why not give the incentive direct to manufacturer, who probably has a whole department of accountants and lawyers who can interpret complex tax legislature, or is it too complicated for them also so they'd rather push the risk of getting it or not onto the consumer?

 

[WasserGKuehlt]

I still don't get why not create a simple wizard online, enter your income, select the car you're buying, your astrological sign, and/or whatever information the rules make the credit dependent on, then tell the taxpayer whether or not the car is eligible and for how much.
[...]
Last but not least, if it's all to incentivize manufacturers, why not give the incentive direct to manufacturer, who probably has a whole department of accountants and lawyers who can interpret complex tax legislature, or is it too complicated for them also so they'd rather push the risk of getting it or not onto the consumer?

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
- 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.
- the point isn't (sorry for repeating myself) to make it easy for the cx in their research; it's to make the manufacturer to "bring it here", and leave it to the manufacturers to fight it out. To your second point, and picking fictional examples here, Hyundai/Kia will howl this is not fair, while GM/Ford will say "your total based on your configuration is x; do you wish to enter your income for a more accurate total?" That is, the manufacturers can and will try and reflect this in, exactly like Tesla used to do/still does with "gas savings".

(shrug) It's what it's.

 

[Satiger]

Hi guys,
I've done some reading and found some conflicting info so I'm hoping you can help clarify for me. I took delivery of my Taycan this past June. I'm considering buying another EV imminently. Assuming the basic qualifications are met, will I be able to claim the credit for both vehicles purchased in 2022?

Thanks!

Assuming you met qualifications for both EVs (pre & post Aug 19th), still only one tax credit per person / year is allowed.

If household members buy EVs on their names, separate tax credit can be applied.

Disclaimer: I'm not a tax professional, please consult with appropriate resource(s).

Side note, I tried to buy two new EVs this year to maximize the tax credit but seperate filings in my case doesn't get me the advantage.

 

[Satiger]

Good point about the new incentives no longer being about electrification of cars, but rather bootstraping the US industry. I still don't get why not create a simple wizard online, enter your income, select the car you're buying, your astrological sign, and/or whatever information the rules make the credit dependent on, then tell the taxpayer whether or not the car is eligible and for how much. Is the government just too incompetent, explicitly wants to keep the taxpayer from knowing, or did the fancy wording resulted in such ambiguity that there isn't anyone in the government who can consistently and authoritatively interpret the law? Perhaps you have another reason why are not willing to make it simple for an average taxpayer.

Last but not least, if it's all to incentivize manufacturers, why not give the incentive direct to manufacturer, who probably has a whole department of accountants and lawyers who can interpret complex tax legislature, or is it too complicated for them also so they'd rather push the risk of getting it or not onto the consumer?

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.

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