7500 EV tax credit update with new bill

[lucidophilic]

Hi folks, this is my first post . Hope, I will owe my Lucid Pure in 23. I signed my reservation with non-refundable option.

Have some question about that federal tax things. I’m gonna move to the US in a month and will tax return firstly for that fiscal year.

How that tax return works? I don’t know US tax system and need your help.

Will my possible tax credit related 2022 fiscal year tax return or 2023 fiscal year tax return?

I am confused about how the federal tax credit can apply on my new lucid purchase in 2023?

 

[whywar]

Hi folks, this is my first post . Hope, I will owe my Lucid Pure in 23. I signed my reservation with non-refundable option.

Have some question about that federal tax things. I’m gonna move to the US in a month and will tax return firstly for that fiscal year.

How that tax return works? I don’t know US tax system and need your help.

Will my possible tax credit related 2022 fiscal year tax return or 2023 fiscal year tax return?

I am confused about how the federal tax credit can apply on my new lucid purchase in 2023?

You will need us tax liability of $7500 to claim the full credit That translates to around $47000 in US taxable income, for 2022, for a single filer, head of household. Google to see if it is restricted to US residents

 

[DeaneG]

It looks like our $1000 non-refundable deposit is insufficient to constitute a "binding contract" for the provisions of the new bill:

Credits for new electric vehicles purchased in 2022 or before | Internal Revenue Service

If you bought or leased a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under IRC 30D.

www.irs.gov

 

[level]

It looks like our $1000 non-refundable deposit is insufficient to constitute a "binding contract" for the provisions of the new bill:

Credits for new electric vehicles purchased in 2022 or before | Internal Revenue Service

If you bought or leased a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under IRC 30D.

www.irs.gov

Then, can we increase our deposit to 5%?

 

[DJL]

It looks like our $1000 non-refundable deposit is insufficient to constitute a "binding contract" for the provisions of the new bill:

Credits for new electric vehicles purchased in 2022 or before | Internal Revenue Service

If you bought or leased a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under IRC 30D.

www.irs.gov

This is what I posted to this the forum last week with a plea to Lucid to change the purchase agreement we were issued when we confirmed our reserveration but, alas, Lucid chose to ignore my pleas. See: https://lucidowners.com/threads/7500-ev-tax-credit-update-with-new-bill.2120/page-13#post-54192

 

[DeaneG]

This is what I posted to this the forum last week with a plea to Lucid to change the purchase agreement we were issued when we confirmed our reserveration but, alas, Lucid chose to ignore my pleas. See: https://lucidowners.com/threads/7500-ev-tax-credit-update-with-new-bill.2120/page-13#post-54192

Indeed, thanks, my memory must be failing!

 

[WJA]

Good News for 2022 Lucid Owners. I saw the following post on Kiplinger's today after the bill was signed:

"EV Tax Credits Are Changing: What’s Ahead: So, what happens to the EV tax credit for the rest of 2022? The Inflation Reduction Act offers some relief for EV buyers who have written, binding sales contracts from this year to purchase EVs that will be placed in service or delivered in 2023. Essentially, if you purchased an electric vehicle before the Inflation Reduction Act became effective, and that vehicle is otherwise eligible for the old EV tax credit, you can claim that credit."

 

[Yugi]

It looks like our $1000 non-refundable deposit is insufficient to constitute a "binding contract" for the provisions of the new bill:

Credits for new electric vehicles purchased in 2022 or before | Internal Revenue Service

If you bought or leased a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under IRC 30D.

www.irs.gov

i

Is the 5% not in the original bill?

 

[DeaneG]

It seems to be not clear when the income limits come into effect. Likely either Aug 16, 2022, or Jan 1, 2023.

 

[BobFM]

At least based on their current guidance, it looks like taking delivery prior to 1/1/23 is the critical piece to maintaining the credit. Lucid already qualifies for the final assembly requirement. TBD if they update later for the income limit prior to 2023, but for now it states:

"If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply (including those involving the manufacturing caps on vehicles sold)."

 

[Paul]

Lucid’s “binding contract” will not be accepted by IRS. IRS expects a non-refundable deposit of 5% of the purchase price to qualify. So now the only way to get the credit for a Lucid is to take delivery before the end of the year.

What Is a Written Binding Contract?​

In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

 

[Parachute Adams]

It looks like our $1000 non-refundable deposit is insufficient to constitute a "binding contract" for the provisions of the new bill:

Credits for new electric vehicles purchased in 2022 or before | Internal Revenue Service

If you bought or leased a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under IRC 30D.

www.irs.gov

No surprise…in fact someone here brilliantly researched and posted the exact IRS reg as to what amount t of liquidated damages would pass muster…this IRS posting today confirm the 5% threshold…

 

[Ksa23]

Like @BobFM said, and to put some minds at ease: with this new guidance, any of us who take delivery of a Lucid before Jan 1 2023 will still be eligible for the $7500. No written agreement is necessary. 2022 delivery is the only condition required.

The 5% requirement and what constitutes a "written binding contract" would only be a determining factor for deliveries in 2023 and beyond.

 

[lucidophilic]

Finally, we signed the contract and most of us are not qualified in actual situation. How we can decrease our loss. Maybe we, whose signed the paper as a non-refundable position, can negotiate with Lucid.

As an option, we can deal with Lucid to reimburse our lose. Not only a cash rebate or incentive but maybe they can offer us a +3 year extra free charge by electrify America on our existing contract. That means 6 years free charge for whose reserve the car before June 30th and 3 years free charge after the date. It will be fair enough imo

 

[borski]

Finally, we signed the contract and most of us are not qualified in actual situation. How we can decrease our loss. Maybe we, whose signed the paper as a non-refundable position, can negotiate with Lucid.

As an option, we can deal with Lucid to reimburse our lose. Not only a cash rebate or incentive but maybe they can offer us a +3 year extra free charge by electrify America on our existing contract. That means 6 years free charge for whose reserve the car before June 30th and 3 years free charge after the date. It will be fair enough imo

Never gonna happen. Lucid will likely do everything it can to help you qualify, like raising the deposit, but no way anyone is getting special treatment because the law changed. It’ll be applied equally across the board.

 

[Paul]

Finally, we signed the contract and most of us are not qualified in actual situation. How we can decrease our loss. Maybe we, whose signed the paper as a non-refundable position, can negotiate with Lucid.

As an option, we can deal with Lucid to reimburse our lose. Not only a cash rebate or incentive but maybe they can offer us a +3 year extra free charge by electrify America on our existing contract. That means 6 years free charge for whose reserve the car before June 30th and 3 years free charge after the date. It will be fair enough imo

I suppose that there is an argument that since the deposit did not meet the IRS definition of a Binding Contract, the contract is not binding so the deposit should be returned if the order is canceled.

 

[USA2DAY]

I suppose that there is an argument that since the deposit did not meet the IRS definition of a Binding Contract, the contract is not binding so the deposit should be returned if the order is canceled.

I think their lawyers will review and analyze state by state basis. I am sure if there is anything they could do to help, they will. I doubt they will easily refund the deposit. Maybe Amex will side with us in this case but who knows
There is still time to figure it out and come up with determination i

 

[digiboxer]

I think their lawyers will review and analyze state by state basis. I am sure if there is anything they could do to help, they will. I doubt they will easily refund the deposit. Maybe Amex will side with us in this case but who knows
There is still time to figure it out and come up with determination i

I think you put your finger on it: it can be a binding contract for state law purposes, but at the same time NOT for IRS purposes (welcome to tax law!).

Now the perception might be that Lucid (and the others--Fisker, Rivian, etc) had access to lawyers who surely could have figured out the IRS standard (heck, a poster here got it right early on) but went ahead and "encouraged" innocent reservists to make their deposits hard. If there is negative PR fallout from that (not saying there will be)---and that $ amount is small in the great scheme of things---the smarter business decision might be to allow people who bound themselves, but decide to cancel, to get they $1000 back.

"Pure" speculation---which is part of what makes this board fun...

 

[Halodde]

If all this is true and confirming the order to make the deposit nonrefundable does not qualify me for the tax credit, I will indeed feel misled in addition to being out an extra $7,500 thanks to Lucid's incomplete, inaccurate information that they provided in suggesting that confirming the order would (may) qualify me. Yes, I agree that their lawyers should have investigated this more thoroughly and figured out what needed to happen in order for us to qualify. What did the other EV companies do to help their reservation holders? Did they get it right?

 

[hydbob]

If all this is true and confirming the order to make the deposit nonrefundable does not qualify me for the tax credit, I will indeed feel misled in addition to being out an extra $7,500 thanks to Lucid's incomplete, inaccurate information that they provided in suggesting that confirming the order would (may) qualify me. Yes, I agree that their lawyers should have investigated this more thoroughly and figured out what needed to happen in order for us to qualify. What did the other EV companies do to help their reservation holders? Did they get it right?

Rivian did not either considering theirs was only $100.