7500 EV tax credit update with new bill

[ikonos]

Here's the current status:
1. Nobody knows exactly how things are interpreted by the IRS until they try.
2. Most tax returns are not audited at all so most people won't even know if it would've been allowed or not. Let your conscience be your guide.
3. The current tax law up through the end of 2022 allows a $7500 deduction for any electric vehicle listed. Currently, the Grand Touring and Dream editions are listed on the IRS website, but the Touring and Pure are no doubt pending. Remember, the Lucid Air is the model and the Dream, Touring, etc. are variants. While they are vastly different to folks here on the board, I would imagine that they will be lumped together in the eyes of the tax code.
4. The current tax deduction does not restrict based on the price of the vehicle. It goes against overall tax burden for 2022.
5. The current guidance suggests that the vehicle will have needed to be put into service by the end of 2022. Having a signed contract without the vehicle in service does not count.
6. The new tax law that takes effect on New Year's Day is much more difficult to interpret. There a guidance is based on country of origin, the union level of the factory employees, price of the vehicle, income level, and other factors. Over time this will need to be interpreted. We have a year to do that. As it stands, no Lucid vehicles will qualify because of the $50,000 cap on sedans.
7. Individual states may have additional programs. California has one, but it is strictly income-tied.

TL;DR: if you bought and received a Lucid this year, go ahead and take the $7500. This is the advice of my accountant.

NOTE: this is not tax of financial advice. I am not a tax professional. And, I'm not very smart. You are on your own, these are purely my opinions.

You should make it a wiki style post that shows up at the top of the page. Very useful summary.

 

[Lucken]

Here's the current status:
1. Nobody knows exactly how things are interpreted by the IRS until they try.
2. Most tax returns are not audited at all so most people won't even know if it would've been allowed or not. Let your conscience be your guide.
3. The current tax law up through the end of 2022 allows a $7500 deduction for any electric vehicle listed. Currently, the Grand Touring and Dream editions are listed on the IRS website, but the Touring and Pure are no doubt pending. Remember, the Lucid Air is the model and the Dream, Touring, etc. are variants. While they are vastly different to folks here on the board, I would imagine that they will be lumped together in the eyes of the tax code.
4. The current tax deduction does not restrict based on the price of the vehicle. It goes against overall tax burden for 2022.
5. The current guidance suggests that the vehicle will have needed to be put into service by the end of 2022. Having a signed contract without the vehicle in service does not count.
6. The new tax law that takes effect on New Year's Day is much more difficult to interpret. There a guidance is based on country of origin, the union level of the factory employees, price of the vehicle, income level, and other factors. Over time this will need to be interpreted. We have a year to do that. As it stands, no Lucid vehicles will qualify because of the $50,000 cap on sedans.
7. Individual states may have additional programs. California has one, but it is strictly income-tied.

TL;DR: if you bought and received a Lucid this year, go ahead and take the $7500. This is the advice of my accountant.

NOTE: this is not tax of financial advice. I am not a tax professional. And, I'm not very smart. You are on your own, these are purely my opinions.

The $50,000 cap on sedans has always struck me as being inane. Yet you are allowed an $80,000 cap on SUVs. Absurd. If you are trying to encourage the purchase of EVs, this law, as so many other laws Congress passes, just makes no sense. The number of sedans that will qualify will be diminishingly small given the price cap as well as all the other qualifiers.

So they wind up pushing many people toward less efficient SUV EVs. Well that sure makes sense.

 

[joec]

The $50,000 cap on sedans has always struck me as being inane. Yet you are allowed an $80,000 cap on SUVs. Absurd. If you are trying to encourage the purchase of EVs, this law, as so many other laws Congress passes, just makes no sense. The number of sedans that will qualify will be diminishingly small given the price cap as well as all the other qualifiers.

So they wind up pushing many people toward less efficient SUV EVs. Well that sure makes sense.

No argument here.

The best rationale I've heard is that the caps will force manufacturers to offer cheaper sedans, so more people can adopt EVs overall. The problem is, pricing doesn't work that way. It's not like manufacturers only want to have expensive EVs. They just can't build good cheap ones until there's more adoption. Which the cap ends up slowing, not accelerating.

Lucid and others will offer cheaper EVs eventually. When they can afford to. In spite of, not because of, this law. But that won't stop congress folk from taking credit in a few years.

 

[MHDave]

So they wind up pushing many people toward less efficient SUV EVs. Well that sure makes sense.

Well, consider that the initial story for "carpool" lanes was to lower the impact of car emissions pollution. But then you'd put all the polluting cars in a priority lane to get them to their destination faster, less emitted pollution.

 

[Lucid23]

Looks to me like if you lease you get it per the updates today.

 

[Miami]

I posted this in a different thread, but I think it belongs here as well…

I am not a tax expert, but I read through the new IRS guidelines, and it’s clear to me that Lucid vehicles delivered after Dec 31, 2022 will not qualify for the tax credit. My opinion is based on the following language from recently revised IRS FAQs:

If I order a new clean vehicle in one year and don’t receive it until a subsequent year, when do I claim the credit? (added December 29, 2022)
The new clean vehicle credit is claimed in the tax year that the vehicle is placed in service, meaning the tax year that includes the date the taxpayer takes delivery of the vehicle.

What additional changes to the credit apply for vehicles placed in service on or after January 1, 2023? (added December 29, 2022)
The most significant changes to the credit for vehicles delivered on or after January 1, 2023, include:
• The minimum battery capacity is increased to 7 kilowatt hours
• Vehicles must be made by a qualified manufacturer (see Topic A, FAQ 9 for more detail)
• MSRP limitations apply, based on the type of vehicle (see Topic B, FAQs 2 and 5 for more detail)
• Income limits apply to taxpayers (see Topic B, FAQ 1 for more detail)
• The taxpayer must report the vehicle identification number (VIN) of the vehicle on the taxpayer's income tax return
• Sellers must provide reports to the taxpayer and the IRS regarding the sale of the vehicle

Are there any price limitations on new clean vehicles eligible for the credit? (added December 29, 2022)
Yes. The manufacturer’s suggested retail price (MSRP) for the new clean vehicle may not exceed the following amounts for the following vehicle types:
• Vans - $80,000
• Sport Utility Vehicles - $80,000
• Pickup Trucks - $80,000
• Other - $55,000
If the MSRP exceeds the limitation for that specific vehicle type, that vehicle is not eligible for the new clean vehicle credit.

Purchase date vs. delivery date: If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement. If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, see Credit for New Clean Vehicles Purchased in 2023 and After.

Do I have to report the vehicle identification number on my return to claim the new clean vehicles credit? (added December 29, 2022) Yes. The vehicle identification number of the new clean vehicle is required to be included on Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, when you file your income tax return.

In other words, the new MSRP restrictions apply starting January 1, 2023, and you must claim the vehicle credit in the year you take delivery. In addition, for those intending to push the tax rebate envelope and beg forgiveness if caught, note that the IRS now requires manufacturers to provide them with VINs for qualifying vehicles, and it requires taxpayers to report their qualifying new vehicle VINs when filing taxes. In other words, the IRS can tell if you’re cheating.

Here’s the link to the revised guidance that I cited:

https://www.irs.gov/pub/taxpros/fs-2022-42.pdf

 

[idiot900]

I may have missed it but I didn’t see any reference to the transition rule or how it allows you to treat the vehicle as placed into service the date before the IRA was enacted. Nor did I see any questions referring to the case of a written binding contract 8/15/22 or earlier and delivery in 2023…all the questions say “on or after August 16, 2022”.

But how would you fill out Form 8936 using the transition rule for a 2023 delivery? Do we say placed into service 8/15/2022 when we file 2023 returns in 2024?

 

[Miami]

I may have missed it but I didn’t see any reference to the transition rule or how it allows you to treat the vehicle as placed into service the date before the IRA was enacted. Nor did I see any questions referring to the case of a written binding contract 8/15/22 or earlier and delivery in 2023…all the questions say “on or after August 16, 2022”.

But how would you fill out Form 8936 using the transition rule for a 2023 delivery? Do we say placed into service 8/15/2022 when we file 2023 returns in 2024?

As noted in my post above, newly issued IRS guidance specifies that a clean vehicle is placed into service in the year it was delivered, not the year it was ordered. More specifically, IRS FAQs, which were updated two days ago, state the following:

If I order a new clean vehicle in one year and don’t receive it until a subsequent year, when do I claim the credit? (added December 29, 2022)
The new clean vehicle credit is claimed in the tax year that the vehicle is placed in service, meaning the tax year that includes the date the taxpayer takes delivery of the vehicle.

 

[idiot900]

As noted in my post above, newly issued IRS guidance specifies that a clean vehicle is placed into service in the year it was delivered, not the year it was ordered. More specifically, IRS FAQs, which were updated two days ago, state the following:

If I order a new clean vehicle in one year and don’t receive it until a subsequent year, when do I claim the credit? (added December 29, 2022)
The new clean vehicle credit is claimed in the tax year that the vehicle is placed in service, meaning the tax year that includes the date the taxpayer takes delivery of the vehicle.

Right, except the transition rule allows you to redefine the date put into service as 8/15/2022.

As I’ll most likely have my car before filing taxes for 2022, I’d imagine then I’ll claim the credit for 2022, since the car was “put into service” on 8/15/2022. Much further in the future might require an amended return.

Not a tax professional either of course!

 

[CrewChief]

Right, except the transition rule allows you to redefine the date put into service as 8/15/2022.

As I’ll most likely have my car before filing taxes for 2022, I’d imagine then I’ll claim the credit for 2022, since the car was “put into service” on 8/15/2022. Much further in the future might require an amended return.

Not a tax professional either of course!

I am in agreement with your analysis!
Happy New Year All

 

[EVNubee_no more]

Seems we need a CPA to clear the tax credit fog for those who reserved a Lucid in 2022..

 

[PrecociousToddlr]

Seems we need a CPA to clear the tax credit fog for those who reserved a Lucid in 2022..

From the new guidance, I don’t think we’ll need a CPA anymore for clarification. Dealerships, or in this case manufacturers, are now required to submit paperwork to the IRS so they can verify the vehicle when you claim the tax credit in 2024. If Lucid doesn’t provide a EV tax credit form, that means the car doesn’t qualify for the tax credit. I only know this because I just bought a Chevy Bolt this year. The form should look similar to this:

 

[EVNubee_no more]

From the new guidance, I don’t think we’ll need a CPA anymore for clarification. Dealerships, or in this case manufacturers, are now required to submit paperwork to the IRS so they can verify the vehicle when you claim the tax credit in 2024. If Lucid doesn’t provide a EV tax credit form, that means the car doesn’t qualify for the tax credit. I only know this because I just bought a Chevy Bolt this year. The form should look similar to this:

View attachment 8428

Thanks a lot @PrecociousToddlr

 

[Negan1000]

From the new guidance, I don’t think we’ll need a CPA anymore for clarification. Dealerships, or in this case manufacturers, are now required to submit paperwork to the IRS so they can verify the vehicle when you claim the tax credit in 2024. If Lucid doesn’t provide a EV tax credit form, that means the car doesn’t qualify for the tax credit. I only know this because I just bought a Chevy Bolt this year. The form should look similar to this:

View attachment 8428

Turbo Tax makes it easy to claim the rebate.

 

[PrecociousToddlr]

Turbo Tax makes it easy to claim the rebate.

Yes, if you took delivery in 2022 Turbo Tax makes it easy. If you took delivery in 2023 the IRS requires that dealerships (Lucid) report the sale to the IRS so it’s easier for them to audit. And as far as I know, Lucid is not reporting any sales to the IRS as the Air no longer qualifies. Here is the requirement from IRS Website…

The sale qualifies only if:

• You buy the vehicle new
• The seller reports required information to you at the time of sale and to the IRS.
  • Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.

Credits for new clean vehicles purchased in 2023 or after | Internal Revenue Service

You may qualify for a clean vehicle tax credit up to $7,500 if you buy a new, qualified plug-in electric vehicle or fuel cell electric vehicle.

www.irs.gov