matrix
Posts: 7
Joined: Tue Oct 23, 2018 3:26 am

Is $7,500 EV Tax Credit still available?

Wed Oct 24, 2018 3:14 am

Fellow Forum Members,
Today I called the Chevrolet national customer service center to see if they could tell me how close GM is to the 200,000 cap specified in the $7,500 EV Tax Credit. They told me they will know at the close of the year. In short, they were no help. Then I called the dealer with a Bolt Premiere on the lot I like and they also couldn't tell me if the $7,500 EV Tax Credit is still available.

In short, I hope anyone out there can clarify for me the following. For those of us buying a Bolt Premiere before 2018 closes out, is the reality one which requires we blindly buy a $42,000 car without knowing whether or not we are going to qualify for the $7,500 EV Tax Credit? I think it's a big gamble and I would appreciate it a lot if anyone out there can provide any information that will clarify this matter. Thanks in advance for any opinions.

SparkE
Moderator
Posts: 1086
Joined: Sun Sep 11, 2016 5:53 am
Location: SF Bay Area

Re: Is $7,500 EV Tax Credit still available?

Wed Oct 24, 2018 7:32 am

Yes, it is still available. The way it works is that the full $7,500 credit is available IN the quarter where #200,000 is reached, AND the next quarter after that. Since GM did NOT reach 200K last quarter, the earliest it could be reached is this quarter, and if it IS reached in Q4 2018, then buyers in Q4 2018 *and* Q1 2019 would be eligible for the tax credit. Heck, even if GM messed up and they reached 200K *last* quarter but mis-counted and later correct - Q4 2018 is still the full $7500 tax credit.

Note 1: that is based on current law. If congress changes the law, anything could happen. If they change it in 2019 for 2019 tax year and you bought in Q1 2019, you're screwed. Heck, if they change it Jan-Apr 2019 for *2018* tax year, you are screwed.

Note 2: it is a tax *credit*, not a rebate. If your total taxes for the 2018 tax year are less than $7500, you won't get the full $7500 you could get if your taxes were higher.

Note 3: If your total taxes for the year *are* less than $7500, maybe you can generate additional income before Dec 31. For example, by moving $$$ from a traditional IRA or 401(k) plan (deferred taxes - you deduct from income when you put in, but you pay when you take out) into a Roth IRA (no deduction when you put in, not taxes when you take out). Or, you could sell stock that would generate capital gains, and up your tax bill. You would have to figure out exactly how much to move/sell to kick your taxes up to somewhere around $7550, or $7600, so that you could your taxes would be JUST a teeny, weeny bit over the tax credit, so your taxes for the year would end up being $50, or $100, or some such (i.e., BIG rebate check from uncle sam).

Note 4: Your total tax for the year is COMPLETELY DIFFERENT from what you end up paying when you file your form, or the rebate you get. The latter two are based on your prepayments during the year, which are deducted from the total tax.

Note 5: Also, there is a tax credit you can take for installing an EVSE (what most people call a 'charger') - BUT it is very difficult to take it the same year you take the EV tax credit of $7500 (you'd end up in 'AMT' (Alternative Minimum Tax) range, and your credit would be disallowed. If you are buying the car in Nov, however, wait until Jan next year to install an EVSE (if you are going to install one anyways). That way, you *might* be able to get a credit for the 2019 tax year as well. You wouldn't get it for 2018 anyways (most likely) so you probably won't lose anything by waiting a month.

Note 6: Don't blindly believe me - go talk with a tax professional about all this. :mrgreen:

Edit: Note 3a: If you generate additional income by moving $$$ from a traditional IRA or 401(k) plan into a Roth IRA : DO NOT get a check mailed to you in your name. That is a *distribution* even if you deposit that check into a Roth IRA (OK, you can jump thru hoops and get it taken care of, but it can be a pain in the arse). You have the institution write a check to the Roth IRA (if it is a different institution) or just transfer it from one account to the other. That way it is a rollover, not a distribution. Distribution before you are 59 years 6 months old has loads of penalties. Talk to a professional about this. If you already have a Roth IRA, then talk to them about what you need to do to make it a rollover - and get it in writing before you do it. If you don't have a Roth, talk to whoever manages your trad IRA or 401(k) about setting up a Roth with them, and what you need to do to make it a rollover.

theothertom
Posts: 51
Joined: Wed Sep 19, 2018 4:13 pm

Re: Is $7,500 EV Tax Credit still available?

Wed Oct 24, 2018 1:28 pm

Thanks SparkE for the detailed explanation. I would add that if you lease, the leasing company gets the tax credit, not you. That way you don't have to file for it at the end of the year. So you should make sure the credit is added into the lease calculation. Sometimes you gotta ask.

Edit:
The "rebate" for installing an EVSE apparently ended Dec.31, 2107, and has not been extended to 2018. But keep your receipts, it may be retroactively extended.

https://electrek.co/2018/02/09/ev-charg ... nded-2018/

Campfamily
Posts: 27
Joined: Fri Oct 27, 2017 2:19 pm

Re: Is $7,500 EV Tax Credit still available?

Thu Oct 25, 2018 1:54 am

I visited my local Chevrolet dealer this past weekend, and found that, for a lease, Chevrolet does NOT pass the $7500 tax credit to the person leasing the vehicle. What they do is artificially inflate the residual value of the car. The residual value for the Bolt is, if I remember correctly, in the high 50% range, which is typical for an ICE vehicle in this class. As a comparison, the residual value for a Nissan Leaf is much lower (in the mid 30% range), but they pass the value of the tax credit to the consumer as a rebate, lowering the capital cost of the lease.

I highly doubt a 3 year old Bolt with 30-36,000 miles will be worth 55+% of MSRP at the conclusion of the lease, if the residual value of other electric vehicles (other than Tesla) is any guide. However, that could change, should Congress decide to eliminate the tax credit.

Keith
SOLD Ford Focus Electric Owner (since May 2015, 38,000+ miles)
WAS CONSIDERING Chevy Bolt
CURRENT Tesla Model 3 LR RWD

matrix
Posts: 7
Joined: Tue Oct 23, 2018 3:26 am

Re: Is $7,500 EV Tax Credit still available?

Thu Oct 25, 2018 3:23 am

SparkE, Theothertom and Campfamily, thank your for your postings. I found them very helpful.

Today I learned something I should share in this thread which is the $7,500 EV tax credit can only be applied to brand new EV purchases. You can't use it on a used EV purchase. I'm mentioning this because today I found for sale a preowned 2017 Bolt Premiere for $32,000 at a Chevy dealer. I figured I would be able to apply the $7,500 EV tax credit since it's for sale at a Chevy dealer and this way I could get the price under a $30,000. But after Googling it I learned the $7,500 EV tax credit can only be used on brand new EV purchases no matter if the preowned EV is for sale at a Chevy dealer.

SparkE just to make sure I'm understanding correctly. Line 74 in the PAYMENTS section of my 1040 tax form for 2017 shows $8,734. For my 2018 taxes line 74 is going to be close to the same amount. In short, I'm exceeding the $7,500 tax credit amount. So if I understand your "Note 2" correctly I should get the full $7,500 amount.

However, what I'm not 100% certain about is how the $7,500 is going to materialize into actual cash I can apply toward my Bolt Premiere bank loan. In your opinion SparkE, which of the two scenarios listed below is correct?

1. The IRS around June 2019 mails me a refund check for the amount of $7,500 after I submit my 2018 taxes before the April 15, 2019 deadline making sure I claim the $7,500 EV tax credit.

2. My friend says I won't see a $7,500 IRS refund check because the $7,500 EV tax credit is used to lower your Taxable Income which puts you in a lower tax bracket which in turn lowers your tax burden a small amount but no where near to the $7,500. I think he is referring to the i1040tt Tax Table the IRS makes available. He thinks your Tax Table location changes for the better by applying the $7,500 EV tax credit but it does not equate to a $7,500 IRS refund check at the end of the day.

My hope is Scenario #1 is the correct one because this will help me the most in paying off my Bolt bank loan. Your opinion will be very much appreciated. Thanks in advance.

GetOffYourGas
Posts: 1151
Joined: Tue Oct 20, 2015 5:25 pm
Location: Syracuse, NY

Re: Is $7,500 EV Tax Credit still available?

Thu Oct 25, 2018 4:48 pm

Your friend is wrong. Scenario 1 is the correct one. It is a Tax Credit, not a Tax Deduction.
~Brian

EV Fleet:
2011 Torqeedo Travel 1003 electric outboard on a 22' sailboat
2012 Leaf SV (traded for Bolt)
2015 C-Max Energi (302A package)
2017 Bolt Premier

SparkE
Moderator
Posts: 1086
Joined: Sun Sep 11, 2016 5:53 am
Location: SF Bay Area

Re: Is $7,500 EV Tax Credit still available?

Fri Oct 26, 2018 2:09 am

GetOffYourGas wrote:Your friend is wrong. Scenario 1 is the correct one. It is a Tax Credit, not a Tax Deduction.


Ditto from me - tax credit (directly subtracted from tax)

theothertom
Posts: 51
Joined: Wed Sep 19, 2018 4:13 pm

Re: Is $7,500 EV Tax Credit still available?

Fri Oct 26, 2018 10:25 am

Campfamily wrote:I visited my local Chevrolet dealer this past weekend, and found that, for a lease, Chevrolet does NOT pass the $7500 tax credit to the person leasing the vehicle. What they do is artificially inflate the residual value of the car. The residual value for the Bolt is, if I remember correctly, in the high 50% range, which is typical for an ICE vehicle in this class. As a comparison, the residual value for a Nissan Leaf is much lower (in the mid 30% range), but they pass the value of the tax credit to the consumer as a rebate, lowering the capital cost of the lease.

I highly doubt a 3 year old Bolt with 30-36,000 miles will be worth 55+% of MSRP at the conclusion of the lease, if the residual value of other electric vehicles (other than Tesla) is any guide. However, that could change, should Congress decide to eliminate the tax credit.

Keith

It's unfortunate Chevy doesn't pass the credit along to the leasee. BMW gives a 7500 "rebate" (aka the tax credit) AND uses a high residual on the i3. I assume they do this to move the cars. Anyway, it makes leases very attractive for i3's.

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