EV TAX CREDITS: IRS Guidance Released: Loophole for EVERYONE TO GET $7,500?! (Not Financial Advice)

[@TuanNguyen-qu8se]

This is so confusing. I get the feeling the government is throwing us a bone saying we get the $7500 credit and then will take it back.

[@CyberCPAOH]

Unlikely

[@shdmd2118]

Yup, I think bottom line is IRS reserves right to come after you if you don’t qualify

[@BeardedTeslaGuy]

It depends on the final guidance that gets approved

[@anthonyscott5134]

I see it as the government TRYING to throw us a bone and Manchin trying to snatch it back. He’s for anything he thinks will help the friggin coal industry, and EV’s don’t.

[@ewaa4152]

DEFINITELY they can take it back. The Nissan Leaf is an example.

[@mcCorn6478]

Oh trust me, Justin. This is exciting! Money is never boring

[@BeardedTeslaGuy]

hahahaha thats the spirit!

[@longviewbarbershop]

Glad I got my Model Y in 23. My accountant says it will have a huge impact come next spring. Not being rich but owing lots of tax is a tough combo. This time I’m in the sweet spot. 💪🏻

[@BeardedTeslaGuy]

nice congrats

[@triadmad]

Being retired, I fall in the not nearly having enough of a tax liability category. I hope all of this gets sorted out by the end of the 1st quarter next year. I really want to get a Model Y before they remove the stalks, and hopefully after they make some pre-Juniper upgrades, such as what appears to be happening in China. The $7,500 would be a very welcome help on final payment day. If I have to, I have retirement funds that were held from my paychecks in a pre-tax manner. I'll work it out with a CPA and the manager of my retirement funds, on transferring enough to a post tax retirement fund, to create a federal tax liability for the year of approximately $7500. Yes, I'll then have a sizeable chunk of state tax to pay all at once, but it will be the price to pay in order to save on the much larger federal tax.

[@joewiley6927]

There may also be a state incentive to utilize.

[@MinusYCore]

If you want a Y, you might look into getting it this year as the vehicle side credit amount may change next year due to additional IRA restrictions

[@trbizwiz1]

Rolling 401k to Roth, to create the tax liability is the best idea, if you’re buying the EV anyway. It’s especially useful, if you’re at the age of mandatory disbursements.

[@BeardedTeslaGuy]

You'd have to squeeze in right at the beginning of the year to be safe. But, when this becomes point of sale, with or without this being solidified, demand is going to surge. Good luck to you!

[@boatnic]

I'm retired and plan to do the same thing. If this turns out to be a non-refundable tax credit, I'll just convert 70K from my regular IRA to my Roth IRA. I live in Nevada, so no State Income Tax to consider. Problem solved.

[@myname6309]

Bearded Tesla Goat! Thank for your uncompromising diligence in providing breaking updates as is the BTG norm.

[@BeardedTeslaGuy]

Appreciate YOU!

[@joebullwinkle5099]

This is the way they should have done it with the Legislation, simply a direct rebate that is income means tested. That way it will level the playing field for median ~68K/low income people to make an EV even more accessible for them as these people are quite often have the longest commutes! The 2023 median household income in the US is ~68K. Thanks for going to all the trouble to present this to us, as with all your video's they have great and very useful info! 😇

[@MinusYCore]

Going by IRS guidance, that is what it is. Under the income limit->full credit that vehicle qualifies for at sale Read my comment to see why I think the law agrees.

[@BeardedTeslaGuy]

completely agree. Unfortunately there are too many special interests and in order to get a deal, they had to complicate it. But such is life in the world of mega bills only

[@jiminauburn5073]

I think they did not want to encourage people to overspend on a vehicle.

[@dianewallace6064]

Wow, very well explained. I am a tax accountant and you nailed it, Guy. I am also a 1 month R1T owner. Loving the adventure...I want the Tesla model 2 (Unicorn) to drive to work each day so following this credit. I know the model 2 credit will only be $3750 in 2024/25. That's okay. I'm broke right now (thanks to Big Red, my R1T) until probably 2025.

[@BeardedTeslaGuy]

Cheers

[@jonrd463]

I've been toying with the idea of getting a Tesla. Saturday, I finally went to a showroom (out of my state, as I live somewhere that has laws against direct sales by car manufacturers. Grrr!), and got to sit in all 4 models. "Toying" has morphed into "Definitely getting". All it took was sitting there, making a Model 3 fart on command to seal the deal. lol. Well, also the comfortable seats, comfortable driving position, awesome stereo, but my inner 12 year old could not stop playing with emissions mode. :D Hopefully things will become more clear as time goes on. I've got my eye on a Black on White Highland Model 3.

[@MinusYCore]

Fun! Be aware the allowable credits on Tesla vehicles may be reduced from $7,500 next year.

[@BeardedTeslaGuy]

and if you have a new iPhone, you can program the "action button" on your phone to activate emissions mode on the exterior pedestrian warning speaker...this is the life my friend, congrats!

[@jonrd463]

@@BeardedTeslaGuy Team Android here. lol. Oh well. I've scheduled a demo drive in a 3 on Wednesday. Can't wait to take it for a spin!

[@doomsday9973]

Agreed manchin will absolutely challenge this, he was furious over the lease loophole

[@BeardedTeslaGuy]

Yep

[@Jeddin]

He doesn’t have a legal standing to sue. You need to be a harmed party in order to sue. Stating that the irs is not implementing the law, the way he intended to be implemented is not legal standing to initiate a lawsuit. They need to find someone who alleges that they were harmed by this law somehow

[@doomsday9973]

@@Jeddin he likely dosent have individual standing to sue but you can bet he can find a party that does, he can then file an amacus brief on their behalf showing that the law is being violated by the IRS. He also has other leverage over the administration as well as he’s a crucial vote in the senate

[@manolitocua4130]

Good news if it holds true cause I am retired and dont have enough tax liabilities at the end of the year. Pls continue to update me on this before I decide on getting a new tesla car. This is the deciding factor for me. Thanks.

[@BeardedTeslaGuy]

Hoping it sticks for everyone

[@AirmanJH]

Pretty important to add that if you want $7500 on a Tesla, best to order this year. Tesla makes it clear that eligibility will change after December 31.

[@BeardedTeslaGuy]

Originally it said the Model 3 would likely lose some of the credit, but shortly after and still today, it is much more broad, meaning the Model Y trims could be at risk also.

[@MinusYCore]

Delivery date determines credit, not order date (Assuming a reduction in 2024)

[@AirmanJH]

@@MinusYCoreNot necessarily. If the change in eligibility is due to a specific change that’s coming in 2024, taking delivery of a 2023 spec car in 2024 would still yield the $7500 rebate. I’ve seen no indication that the eligibility change is due to a change in law. It is more likely due to a change in battery composition in the refreshed models.

[@MinusYCore]

@@AirmanJH The change in eligibility is likely due to the Excluded Entity clause in (7)(B) " (B) any vehicle placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle (as described in subsection (e)(2)(A)) were manufactured or assembled by a foreign entity of concern (as so defined).’’. Chinese sourced components would potentially zero the credit.

[@jiminauburn5073]

@@BeardedTeslaGuy I wonder if that is just the MY RWD versions. They probably are using the LFP batteries just like the M3 RWD.

[@MrOktsx]

If this holds true, Tesla has stated that in 2024, some models may not qualify for the full $7500. Alot of unknowns with less than 12 weeks left in the year.

[@BeardedTeslaGuy]

yep, we already know the Model 3 is at high risk, perhaps the Model Y is too? We shall see what all happens to the reduction of half, or all of the credit on certain models in America

[@phenom354]

@@BeardedTeslaGuy they are risk for the LFP battery which is in the standard range 3/Ys.. that battery is sourced from China and Tesla would only be eligible in 2024 for the 3,750 credit

[@daniml7258]

The law is very clear, you only get back up to 7,500 or whatever you owe in federal taxes below 7,500. If the government wants to give every EV car buyer 7,500 then change the law.

[@BeardedTeslaGuy]

thats certainly what the law says. But the institution that implements the law says the interpret the law differently. Will be interesting to see how this shakes out.

[@jiminauburn5073]

100%. Follow the law. We are a country of laws. When you start ignoring the laws that you do not like, we lose the rule of law, and the foundation of our country.

[@sirmontego2]

Sorry, but your comment is wrong. The law does not actually say "or whatever you owe in federal taxes below 7,500." Rather, 26 USC Section 30D(g)(2)(C) says "in an amount equal to the credit otherwise allowable to such taxpayer,". In other words, the full $7,500. Note that "credit otherwise allowable" means what the taxpayer can CLAIM, not what the taxpayer can USE. That distinction is critical. The law is also very clear under what circumstances the IRS can recapture the tax credit (see 26 USC Section 30D(f)(5) and (g)(10)). Under both of those paragraphs, the IRS does not have the authority to recapture an excess tax credit for insufficient tax liability.

[@MinusYCore]

@@sirmontego2 Right. The *personal* credit under (a) is not refundable per (c), but the point of sale credit is from section (g), not (a), and is refundable to the dealer per (g)(7)(C)

[@slyguyaction]

When we leased our 2021 VW ID4 we were able to take $7,500 right off the top and didn't have to worry about being "able to qualify" or having enough tax liability or any of that. It'd be nice if the IRS introduced some instant credit that would be easier to understand and something more working folks could qualify for. Having money taken right off the cost of the vehicle is key.

[@doomsday9973]

Yep basically the manufacturer is giving you a lease incentive you aren’t actually getting the “credit”

[@MinusYCore]

That's the Commercial Clean Vehicle Credit (also from the IRA)

[@BeardedTeslaGuy]

That is how this is intended to work, at time of purchase and applied to the purchase in the same manner of a down payment.

[@jiminauburn5073]

That is because you do not own the vehicle. The leasing company is buying it and they qualify for the tax credit, and are giving you a discount on your lease amount that matches. Personally, if someone does not even have $7500 in tax liability, I do not think they should be buying a $40K car. Too many people are living way above their means.

[@doomsday9973]

@@jiminauburn5073 for the most part you are right if you don’t havd a 40k tax liability you really have no business buying a 40k car, that being said there are exceptions like retirees who have little income (and therefore low liability) but a lot of cash in the bank

[@2pdlpwr]

This would be a really big help for me to afford an Ev, getting the full credit. I don't have enough tax liability. But relying on a dealership to do the right thing.... and not to steal the whole credit away. They have proven to steal from there customers, lately. Getting them to do the right thing isn't possible. There all cutthroat. Why sell with a 5 percent markup, when they could get 50 percent.

[@BeardedTeslaGuy]

I hope it works out because a lot of people would benefit from this.

[@MinusYCore]

Dealer must give you the full amount that you then apply to the purchase. All tye numbers will be on the purchase agreement, they can't keep the amount. However, watch out for them increasing the purchase price...

[@jiminauburn5073]

@@MinusYCore Yeah, it was a bit different with people that leased. The leasing company could give you credit for the $7500, any part of it, or none of it. Some leases would only give you $3750 of the tax credit.

[@Geckogold]

I hope that it gets upheld and anyone making under $150k, or $300k married filing jointly, can qualify for the full $7500 in this instance. The intent of the law appears to be to help more Americans transition to electrified vehicles. EV's will help lower income people a lot, because they're generally cheaper to fuel and has much less maintenance than a gas car. And for people complaining about "gas cars don't get subsidies", you do in the form of lower gas prices that everyone has been paying for several decades now. Otherwise gas prices would be much higher like in Europe.

[@BeardedTeslaGuy]

If this proposed guidance gets upheld, then yes, income will be all that matters IF you transfer credit to dealer

[@jiminauburn5073]

Gas prices in Europe are high because of taxes. I still contend that if someone does not make enough to have at least $7500 in tax liability, it is a very poor financial decision to buy a $30K+ car.

[@tkbuz]

This would be HUGE if it holds!!

[@BeardedTeslaGuy]

Yes it would

[@tkbuz]

@@BeardedTeslaGuy most people think $150k for individual and $300k for married is “rich enough” to afford an EV without a subsidy. My relative earns just over the threshold as an HR manager in NYC and pays $5400/mo rent. So not really…

[@JinxPalm2023]

​@@tkbuzNYC has 5 boroughs and most aren't nearly as expensive. $5400 a month rent is by choice 💯

[@bobbyvee8941]

Yep. Clear as MUD!

[@BeardedTeslaGuy]

Truth

[@jonferraez]

You can't utilize the point of sale federal tax credit in 2024 on any Tesla model purchased in January 2024 currently, even though there are 3 x Tesla car models that do qualify for the credit (out of 10 total car models). Tesla was late to implement the point of sale process, so nobody has been able to prove that works for a Tesla vehicle as of yet (for a vehicle purchased in 2024 at a delivery center on delivery pickup day, as they don't have the process in place there). You can't get the credit on your 2025 taxes if you purchase a Tesla in 2024 without doing the point of sale method, hence this is a weird situation right now (for the first week of January 2024 delivery dates).

[@BeardedTeslaGuy]

yea, its kind of a mess at the moment.

[@gilbertbarraza871]

I think that if you buy an ev the irs will be monitoring this and will potentially flag you if you don't qualify in the quick check. They'll come for that money in your taxes. Seems easy enough to understand because you're attesting at sale you do qualify. So you're liable if you signed a document and then don't qualify.

[@BeardedTeslaGuy]

They certainly will. It just depends on if this guidance stands if they’ll come after you for liability gap

[@jiminauburn5073]

That is what the law says. The Biden administration is just trying to create and modify the laws to do what they want. Tired of the administrations not following the law. Follow the law, if you do not like the law, then change the law. If we start picking and choosing which laws we will follow, then we will have chaos.

[@JavierGarcia-hd7xm]

That’s very sketchy. I wouldn’t leave it up the government officials to fight my problems or my tax liability.

[@BeardedTeslaGuy]

Agree 100%

[@bgoldsmith]

You got my sub with this report. Thanks man!

[@BeardedTeslaGuy]

Awesome, thank you!

[@newstart4jim]

Thank you for keep us updated

[@BeardedTeslaGuy]

of course!

[@tigerfan3456]

We will know if this will be challenged once the first dealership apply to get this credit back from the government. That’s how it supposed to work. You transfer the credit back to dealership then dealership apply to get the money back from government.

[@MinusYCore]

Not quite, you elect the transfer clause, IRS gives dealer money, dealer gives you money, you use money as down payment. IRS never gives you anything.

[@BeardedTeslaGuy]

It’s all done at time of sale through a new portal

[@Andy44Andy]

There should be lawsuit filed against government because public tax money is given away to high income maker. This is cheating to people who has low income and low tax due. E.G. low income person with only 3k tax due can’t get full 7.5k credit, but high income maker with 8k tax due gets full 7.5k tax credit. This is unfair tax payers money given back to high income maker. Why should my money is given away unfairly? Can any lawyer answer this?

[@BeardedTeslaGuy]

There is literally an income cap…I’m not sure how this benefits high income earners.

[@iloveme4ify]

So to qualify for the full refund you have to pay back taxes? What if self employed with dependents and you get a refund?

[@enockheewonyoon1001]

Incorrect Example (the way you might think it works): Tax is 10000. Withholding was 8000. Only 2000 remains, so instead of 7500 tax credit you only get 2000. You only receive 2000 value of the EV credit. You owe 0. Actual Example (the way it actually works): Tax is 10000. Withholding was 8000. Your tax credit is 7500. Your tax after credits is 10000 - 7500 = 2500. Your refund is withholding - tax after credits = 8000 - 2500 = 5500. You really receive the full 7500 value of the EV credit. I know it may sound paradoxical, but a "nonrefundable" credit can actually show up as a refund, as in the above situation.

[@dianewallace6064]

I guess what's in it for the dealers is they get to get an extra sale that they would not have gotten otherwise.

[@stantheman2194]

and they will mark it up $7500

[@dianewallace6064]

@@stantheman2194 Yup

[@BeardedTeslaGuy]

yea, they'll probably be allowed to add a processing fee for the credit, something like $499 im sure.

[@225TTuned]

7:43 Income cap is still in place. Tough part is predicting income. Buy a car in January, transferring to dealer, taking it up front, then trying to predict your income. No IRS recapture?

[@MinusYCore]

If your previous year's income qualified, you are good to go. Otherwise, yes there is risk of recapture.

[@225TTuned]

@@MinusYCore wait a sec you can take the credit based on prior years income? For example, 2022 income $299k, buys and takes delivery cheap mod3 in oct2023, can claim the $7500 on 2023 taxes? While 2023 income is $350k(not qualified)

[@BeardedTeslaGuy]

In the legislation, which this guidance does not differ, the income cap can be used on previous year or year of placing vehicle in service for income purposes.

[@philemon8597]

Thanks for the update 👍🏽

[@BeardedTeslaGuy]

welcome!

[@rwutube]

Wow. The definition of “rich” is quite something these days.

[@BeardedTeslaGuy]

in some cities 300k for a family of 4 is not that much money. Where I am from $300k family of 4 is a comfortable life, but its certainly not "rich"

[@marklefler4007]

Thanks for the great video and great research.

[@BeardedTeslaGuy]

of course!

[@dashawn8971]

Thank you making this video’s about this stuff

[@BeardedTeslaGuy]

No worries!

[@jiminauburn5073]

Why would you hope that the courts uphold the guidance, rather than the LAW? Do you want to be a country where the administration can just ignore the law when they see fit? Without the rule of law, our country will be chaos. Follow the law. If you do not like the law, then change the law, don't ignore it.

[@Bravowilly]

If you want a tesla, you better wait for Jan 1 2024 or after to purchase. $7500 off pp is HUGE

[@MinusYCore]

Some models might not be eligible for the full credit next year.

[@BeardedTeslaGuy]

Assuming nothing changes from the "proposed" guidance that was released on Friday.

[@doomsday9973]

Why? You still get the 7500 off. You just don’t get it immediately

[@MinusYCore]

@@doomsday9973 Assuming sufficient tax liability. A credit to taxpayer is non-redunable, you can only get back as much as your tax liability. A 2024 on transfer to dealer amount does not depend on the taxpayer’s tax liability. Vehicle eligibility criteria changes next year, so some cars may no longer qualify for $7,500.

[@doomsday9973]

@@MinusYCore correct

[@MrLwhiteford]

Be nice if they would fight to close loopholes for the rich. Soon as it's for working Americans there's a problem

[@BeardedTeslaGuy]

come on now, they have to fix these loopholes that affect us middle class folks. Get back in line son!

[@abrealgaming5649]

Even though I'm confused as fuck right now, you've done a much better job explaining this than any hope I had of outside sources

[@craigarnold1212]

It will be challenged. Not sure it will be Joe, depends on who is going to pay for the lawyer and cover costs. This is not something you can get reimbursed for if you win and not a use for campaign contributions.

[@BeardedTeslaGuy]

they'll fund it without issue lol. Exxon will pay

[@JamesWindland]

It was just fine as a tax credit, not sure this was a needed change. I really don't understand anyone buying a new car for 50k plus without that much liability.

[@BeardedTeslaGuy]

but, that would be too simple

[@ryanccc777]

Interesting info on the IRS website as this might matter for some, let me know your thoughts. You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit. This is direct from the IRS website and while not a CPA it sounds like if your AGI is over $300k in 2024 and do a point of sale deduction you have a one year look back I.e. can look back to tax year 2023, not my wheel house so thoughts are appreciated

[@BeardedTeslaGuy]

Yes, you can use previous year or current year

[@ryanccc777]

@@BeardedTeslaGuythanks!!!

[@ryanccc777]

@@BeardedTeslaGuythanks this makes sense and with this scenario holding true it would make sense to purchase in 2024, direct point of sale deduction as apposed to a tax credit would lower the loan amount and lower interest paid at point of sale.

[@TheLastMoccasin]

@@BeardedTeslaGuy If it stands the way it's currently written, won't everyone, including people who make more than $300k still qualify since they will also "transfer it to the dealer"?? So confusing, thank's for all your help understanding this!!

[@famousamos1]

@@TheLastMoccasinyup that’s what I also was thinking. If there’s no qualification to transfer the $7,500 federal tax credit to dealer then they won’t know MAGI of the person transferring the $7,500 federal tax credit to dealer as well.

[@2pdlpwr]

If The Government would JUST give 0 percent 7YR loans for all electric vehicles. The benefits would be CLEAR. Not watered down with confusion. "Maybe tax breaks" "credits" or refunds that could evaporate at tax time. It would be so much clearer, and not relying on the dealerships to do what is right.

[@BeardedTeslaGuy]

that would be pretty cool honestly

[@tlangton]

Why did they make this so confusing?

[@BeardedTeslaGuy]

lol that’s the government for you

[@dustinpeters3109]

Why the heck can’t our government just give people making less that 100k a year or 150 for joint filers the 7500 like just help the working class people out. If I identify as Israel or Ukraine could I get help?

[@johnlabernik4599]

Long story short, this confusion only applies to people who have less than $7500 in federal tax liability

[@MinusYCore]

Mostly yeah. Up to $30k if married people buy four cars in a year using transfers.

[@BeardedTeslaGuy]

lol, well, yea, if you have $7,500 in liability, it doesn't matter what way this goes. Just keep moving forward.

[@MaximaPolak]

I thought the credit is a point-of-sale “credit” as of 01/01/24. Did something change with this?

[@MinusYCore]

It acts like additional down payment at time of purchase

[@BeardedTeslaGuy]

It’s still point of sale if you elect it to be

[@TaxmanHog]

Please follow and do an update if / when a suit is filed and the results of it.

[@MinusYCore]

Doubt there will be a suit, (g)(7)(C) is pretty clear that amount transfered to dealer is refundable

[@BeardedTeslaGuy]

we shall see what happens

[@kenyattaclay7666]

It’s hard not to get political on this subject but it’s safe to say that the very same people, and we all know who they are, that will challenge this are the exact same ones who willingly took PPP loans & willingly accepted forgiveness of those loans but want to keep regular working/middle class people from benefiting from any sort of benefits such as this. However as someone who did get a masters in political science my best guess that is will get challenged but if the courts actually follow precedent (which is up in the air) they should rule that this is a tax matter that needs to be resolved by congress who is in control of closing loopholes.

[@BeardedTeslaGuy]

Yea, it shouldn’t be political either, but this is America

[@jiminauburn5073]

To me it is what the law says. If the law says they could take PPP loans and get forgiveness, then they followed the law. I am a rule of law guy. Don't like the law, then change it, don't ignore it. If we start letting administrations just change or ignore laws as they deem fit, then the foundation of our country begins to crumble. Everyone is all for it when the administration ignores a law that they do not like, but all upset if another administration did not follow a law that they liked. Kind of like free speech, we have it or we don't. Blocking free speech that you do not like just means that someone in the future can block your free speech if they do not like it.

[@kenyattaclay7666]

@@jiminauburn5073 First, I'll point out that the forgiveness part of the PPP loans was a loophole that was created by the law that was signed which is the EXACT same thing as this loophole because it was written into the law that was signed. Second, it still doesn't change the argument that the same people that were willing to exploit that loophole are the ones that will try to keep regular working people from doing the EXACT same thing. Third, the reason SCOTUS gave for striking down the student lone forgiveness is because they said that congress is in charge of tax law & students loans fall under tax law so if there is to be student loan forgiveness it needs to be a tax law passed by congress. If this is challenged & the courts follow the ruling by SCOTUS from just this past June then this loophole is something that has to be closed by congress, not the courts.

[@jiminauburn5073]

@@kenyattaclay7666 Are you saying that the PPP law did not specifically say that you could have the loans forgiven? That the administration twisted something to magically allow people to get the loans forgiven, even though it did not say that in the law? If that is the case, then they should not have been able to get them forgiven. How do you think there is a "loophole" in the EV credit law that allows people to get the tax credit refundable, even though it says that it is not? Other than the IRS saying that, without actually referencing the law.

[@kenyattaclay7666]

@@jiminauburn5073 What I'm saying is that the infrastructure law specifically states that these business are exempt from the same requirements so turning over the rebate is a loophole just like any other loophole. This isn't that hard to understand, based off of past president set by the Supreme Court only 3 months ago this is an issue that would have to be taken up by congress because the so called loophole is part of the law so all you're doing is trying to make a circular argument, it is in FACT in the law.

[@azbat3829]

Will Tesla Model Y have the $7500 EV tax credit in 2024, using the new mineral and assembly requirements for the batteries?

[@BeardedTeslaGuy]

we dont know for sure yet, but I think the LR and P likely will, but there could be some changes that impact that.

[@daedricmode6427]

How does one transfer tax credit to the dealer?

[@MinusYCore]

Dealer handles everything, buyer just attests to eligibility.

[@BeardedTeslaGuy]

It will all be done via a portal that was created. It will be handled via paper work at time of purchase at the dealer.

[@jiminauburn5073]

A family of four making $75K should not be buying a Tesla.

[@Jumpkix]

So reading between the lines. This tax credit loop-hole is for the poor who couldn’t afford the EV payment anyways due to a lack of income with out astronomical interest rates since they will have to take out a loan regardless. So will repo’d Tesla’s & other EV’s be a thing in 2024?!

[@BeardedTeslaGuy]

yes and no, its for those who have no liability, including potentially retired folks, who are not "poor" but dont have a tax bill.

[@Holt0216]

Confusing

[@BeardedTeslaGuy]

Tax law is so much fun

[@flolou8496]

Has anyone already considered this? Your in the market for a used EV and you know your going to be only 2nd owner, but the first owner already applied the 7500 tax credit as the first ower, (and the credit follows the car not just the people doing the filing on there tax returns) so as the 2nd owner, are you allowed to claim the 4,000 used EV tax credit in this case?

[@BeardedTeslaGuy]

only one credit can be applied per vehicle.

[@flolou8496]

I hope your wrong about that, it seems to go opposite of the intention of offering the 4K tax credit in the used EV market, if the previous owner took the 7500.00 credit, but if you are right, do you think it's easy to identify if the car's not eligble for the 4K by cross checking it's VIN # with the IRS?

[@domg7359]

As you stated at the end of the video, the income restriction is still very much in place. So, it does not apply to 'everyone'. Title is misleading.

[@BeardedTeslaGuy]

Fair, I guess what I meant was everyone that is qualified for the credit will get the full credit.

[@grahamswett6430]

Does this same logic apply to the $4000 credit for the purchase of a previously owned EV from a dealership???

[@BeardedTeslaGuy]

it also can be transferred to dealer

[@natnathutchins]

We have a new tax commissioner… wonder what he’s saying. 😅luv the info ❤

[@dkras]

Video quality is fire

[@BeardedTeslaGuy]

bam! thanks!

[@pplong1984]

what about ppl who makes more then 300k a year?

[@BeardedTeslaGuy]

SOL

[@SkippyPB.]

The dealers will just mark it up by $7500.

[@BeardedTeslaGuy]

unfortunately likely true in some areas.

[@ShepIP19702]

So, since Tesla does not use a dealer network and thus there is no “dealer” to transfer to, how will Tesla handle it???

[@BeardedTeslaGuy]

Tesla qualifies as a "dealer" in the definition in the law. They are good dont worry

[@spacemanspiff9773]

Who would’ve thunk that the government causes confusion? Usually they get their act together… 🤣 BTW, Go, Boilers!

[@boilerslp3921]

Boiler up!!!

[@BeardedTeslaGuy]

truth! and...BOILER UP!

[@sojournern]

But this only applies to people buying cars in 2024, it does not apply to cars bought in 2023.

[@BeardedTeslaGuy]

Correct

[@Full_Self_Driven]

Can married couples who file jointly get claim two EV credits if they each buy a Tesla? Do they have to wait until the 1st of next year to buy and claim the second?

[@cmeller55]

We make well over the income limit. But honestly, if I can get $7500 credit by transferring it to the dealer I’m getting a Tesla model y as a third car in January.

[@MinusYCore]

Income limit still applies to transfers.

[@jiminauburn5073]

@@MinusYCore Not really fair. If they are ignoring the tax liability part of the law, why not the income limit.

[@MinusYCore]

@@jiminauburn5073 They aren't ignoring tax liability. (g)(7)(C) sets the dealer payment as refundable and if (g) is taken (a) isn't. I disagree with Bearded's interpretation.

[@duncanmacleanjr]

Not "everyone" if income limits still apply...

[@BeardedTeslaGuy]

Income limits will still apply

[@mikedsjr]

We are talking about EVs. If you can afford an EV, which I can, you’re rich. At least IMO. The poor better be driving used cars. They’re wasting a lot of money if they aren’t. I don’t think anyone’s going to be making sub $10k EVs ever

[@jiminauburn5073]

That is my thought. If your tax liability is not even $7500, you probably should not be spending $30K plus on a car. Each person can do as they wish, but too many people live beyond their means, paycheck to paycheck.

[@DavidBezeau]

Hey BTG have you heard any updates on this?

[@BeardedTeslaGuy]

Still no legal challenges

[@tz1592]

Super frustrated with these income limitations. Since when does making more than $300K qualify you as "rich?" If you have a home, 3 cars since kids are driving now, 2 kids about to go to college, retirement savings, and all of the expenses a family has, $300K is NOT a lot of money anymore. It should be about the impact on environment, not how much money you make.

[@BeardedTeslaGuy]

yea, they had to put a number somewhere and thats where they landed. Just make sure you are looking at Adjusted Gross, not Gross

[@donaldtoombs3676]

Please help me answer I live in Maryland Income 90K Tax Liability 11K 2023 Model Y Preformance Delivery 02/04/2023. Fully Qualifies 7,500 H&R Block states I don not qualify Any Ideas should I go to an accountant H&R Block is lost in the sauce

[@waynewei3380]

If Manchin really wants to run for president like what is reported in the media, I think he WILL challenge. Otherwise, he may just try to make some noise for publicity.

[@jasonshortphd]

They should just stop the credit entirely. It is driving bad behavior, and is basically a government handout to car companies. If they stopped it, the cars would magically drop in price.

[@BeardedTeslaGuy]

nah, at least in high interest rates prices wont be able to swell too much.

[@bermeister4093]

Can the dealer opt out of this in 2024? Or do they have to honor the buyer’s ability to transfer the credit for point of sale benefit?

[@MinusYCore]

Dealer must register for the program to be eligible.

[@4literv6]

I think many will try to play stupid and not register as has been rumored over concerns of it taking a long time for the dealer to receive it. Ala cash for clunkers, the guidance though talked about issuing credits within 10 business days I think? Should be interesting, of course sadly confusing and likely maddening for us ev consumers. 😏

[@MinusYCore]

​@@4literv6 Guidance calls out 2-3 day turn around. Q14: How does a dealer know the IRS will issue an advance payment to the dealer? How quickly will the IRS issue advance payments? (added October 6, 2023) A14: The IRS will promptly issue advance payments via direct deposit (ACH). The IRS anticipates deposits will typically occur within 48 - 72 hours of a successfully submitted time of sale report and advance payment request. Dealers will receive real time online confirmation as to whether an advance request was accepted or rejected.

[@4literv6]

@@MinusYCore awesome news then. Wonder if any dealers who dislike evs will refuse to register? Should be interesting to see how it works come January.

[@BeardedTeslaGuy]

Well, technically the Dealer can not sign up and register, which would be a big mistake I would think as anyone who wants to transfer the credit wouldn't want to buy from them. All OEM dealers will most likely be signed up, can't imagine any of them not doing so.

[@successtrainingservices9937]

How is the income cap going to be enforced if the car qualifies and there is no consequence recapture to the individual? I mean the deal is done dealer got money and no recap to buyer hands washed

[@TheDavidPlata]

Sounds like the income cap is gone. If the credit is going to transfer to the dealer.

[@MinusYCore]

Law calls out recapture if income limit is exceeded. Also purchaser must assert that they meet (previous year) or will meet (this year) the income limit at time of purchase. (10) RECAPTURE.-In the case of any taxpayer who has made an election described in paragraph (1) with respect to a new clean vehicle and received a payment described in paragraph (2)(C) from an eligible entity, if the credit under subsection (a) would otherwise (but for this subsection) not be allowable to such taxpayer pursuant to the application of subsection (f)(10), the tax imposed on such taxpayer under this chapter for the taxable year in which such vehicle was placed in service shall be increased by the amount of the payment received by such taxpayer.’’

[@successtrainingservices9937]

@@MinusYCore OK there is the law but, I don't see the teeth...

[@MinusYCore]

Income cap (f)(10) is still in place 10) RECAPTURE.-In the case of any taxpayer who has made an election described in paragraph (1) with respect to a new clean vehicle and received a payment described in paragraph (2)(C) from an eligible entity, if the credit under subsection (a) would otherwise (but for this subsection) not be allowable to such taxpayer pursuant to the application of subsection (f)(10), the tax imposed on such taxpayer under this chapter for the taxable year in which such vehicle was placed in service shall be increased by the amount of the payment received by such taxpayer.’’ @@TheDavidPlata

[@MinusYCore]

@@successtrainingservices9937 Adding $7,500 or $3,750 to your tax bill isn't teeth enough?

[@ZuriChuhall]

If a family makes under 300k in 2023 but over 300k in 2024, will they still qualify for the credit?

[@MikeRobot]

no

[@BeardedTeslaGuy]

as long as you buy the car in 2024. You can use previous year or current year of when the vehicle was placed in service to qualify for the income cap.

[@sirmontego2]

Yes. The modified adjusted gross income of the purchase year (actually the year the car is placed in service) or the previous year's modified adjusted gross income can be used to get below the income cap. Source: 26 USC Section 30D(f)(10).

[@Frankillz]

I always been against this credit, if you make enough money to buy a expensive car, you don’t need no credit. Our country could use that money in something else.

[@user_z01]

the Average cost of a new car sold in the US is in the same space as these cars - so this credit should be able to help a large swath of people in the US, not just some upper percentile as it seems you are implying

[@BeardedTeslaGuy]

I tend to think this will be a big deal for a lot of Americans. Starting in 2024 the Chevy Bolt as example will be able to be had at time of purchase for 19k...

[@Frankillz]

@@BeardedTeslaGuy 19k for a volt, that right there helps people that can’t afford a decent EV or any car.

[@Frankillz]

@@user_z01 I own 2 Teslas, bought them a couple of years ago before all the price hikes and credits, I am not rich but I pay a decent amount back in taxes every year. Do i need a credit to buy a car ? No. I can afford it. The government could use that money to fund other things, people will buy EV’s regardless, its the new tech and it’s been proven that it works.

[@roylappin4491]

I am retired, I would like the $7,500 and an electric vehicle but don’t make enough $ to benefit! Will this still be true next year?

[@MinusYCore]

Under my understanding of the law and IRS guidance, you would be able to benefit from the full credit allowable for the vehicle even without high tax liability.

[@roylappin4491]

@@MinusYCore thank you hopefully that is true. I will check with my tax guy next year. I would like to go electric.

[@MinusYCore]

Be aware extra vehicle side restrictions kick in next year, so credit available may be lower. @@roylappin4491

[@BeardedTeslaGuy]

If the guidance is approved then it will be in effect

[@artistjosephtubb]

I find this whole video confusing.

[@BeardedTeslaGuy]

its tax law, its pretty much meant to be so they can ensure everyone has a job forever

[@burnrubber2002]

Is that a Purdue shirt you have on? If so, Boiler Up buddy! 🎉🎉

[@BeardedTeslaGuy]

Boiler up!

[@ThickCutBacon]

Thanks for this video

[@BeardedTeslaGuy]

Most welcome

[@mountainmantesla4395]

Is there a limit to how many times you can get this credit? Can I get a new Tesla Every year and get $7500 each year?

[@MinusYCore]

For transfer, two per tax payer per year, married filing jointly can get 4 transfers per year. For direct to taxpayer, no limit (but you'll eventually max out your tax liability)

[@BeardedTeslaGuy]

only for the number of dealer time of sale transfers. You can only do that twice per person per year. The rest you'd have to do via your taxes, and there is no limit there. You just have to have enough tax liability and not exceed income cap.

[@vangtk10]

Since when did the government make anything easy for Americans?

[@BeardedTeslaGuy]

truth

[@ryanis08]

The "rich" are still working Americans and should get the credit

[@BeardedTeslaGuy]

Nah, they don’t need the assistance to buy an EV

[@miami3863]

The ONLY part clear about this guidance is that rich people don’t qualify. Govt. said let’s make it confusing af for the non-rich people.

[@RoyalCrane]

Small business owners are often considered “High income individuals” and are funding the tax base and therefore subsidizing EV cars for those that may be making only slightly less. Everyone should admit this it is nothing more than income redistribution.

[@inciwillard991]

It's not about "assistance" to buy but we get creamed with high taxes even though more than 1/3 of our gross income goes to our foundation that helps K-9's suffering veterans with PTSD, disability guide dogs for children etc. and still pay quarterly taxes to turn around to pay more at the end of the tax year. You'd think they'll give a tax credit for those who already pay through their noses even after reaching 70 years old.

[@JasonBedient]

When the only ev trucks are $80-$90k the tax credit would be a deciding factor. If I'm not going to get a tax credit I'm going to go looking for a used one to balance out the cost. Why not let high earners still have an incentive but raise the minimum purchase price of the car they need to buy to $50k or more, etc? Is the point to promote EV adoption or to subsidize cars for low income earners?

[@bobbunn7167]

I got a good laugh watching this as I was a Revenue Agent for 34 years before retiring. I am sure it will be challenged in court. In the meantime it would be fun to call 5 different agents and get 5 different answers. I hope the full credit will be granted if transferred to the dealer as that will help out the retired folks that do not qualify otherwise. I am actually thinking I need an EV pickup.

[@BeardedTeslaGuy]

I hope it sticks too because the one thing about this credit that bothers me the most is that if you make less money, and therefore have less tax liability, you dont qualify for the full credit. I get it that others paid more in taxes, but if adoption rate is the goal, make sure those who could benefit from this and actually get an EV because of this should get it!

[@jiminauburn5073]

@@BeardedTeslaGuy But if it is refundable, that takes it from you not having to pay as much in taxes, thus keeping more of YOUR money, if you buy an EV, to now taking money from other people and giving it to people to buy an EV. Seems kind of unfair. It is one thing to say, you do not have to pay any taxes, compared to tax payers are going to pay you to buy an EV.

[@dontasearcy8584]

This is a scam. They mentioned that its to help low income citizens but most if not all don't fall into the liability category.

[@MinusYCore]

The transfer credit is not dependent on the buyer's tax liability per IRS guidance and my understanding of the law.

[@BeardedTeslaGuy]

its unfortunate that the bill was written in a way that penalizes the lower income earners. However, if this guidance sticks, then everyone under the income caps will get the full amount.

[@jiminauburn5073]

Maybe they did not want to encourage low income people to overextend themselves into buying a $30K+ car? Why encourage them to spend $600/month on a car payment?

[@bigby6023]

So why isnt anyone talking about tesla models not qualifying for the full credit next year ?

[@MinusYCore]

A few are in this comment section.

[@BeardedTeslaGuy]

because we dont know which models will and will not qualify for the full amount. At the top of Tesla's website, it clearly states that they will lose some of the credit next year

[@jiminauburn5073]

@@BeardedTeslaGuy I am guessing that it will probably be the M3 RWD and MY RWD with the LFP batteries from China. Unless the materials in the other batteries would also not meet the increased threshholds.

[@tonya.2645]

"Transfer to the dealer" HOW???. Entire video did not explain what that means. Is that a lease?

[@MinusYCore]

Roughtly: Dealer pre-registers with Treasury, you buy eligible car, attest that you meet income limits, give them your social security number, they send that with VIN to Treasury, Treasury sends back OK, dealer sells you car with the credit deducted from bottom line and Treasury transfers them the credit in 48-72 hours. No major action needed by the purchaser.

[@BeardedTeslaGuy]

no, this was not a video on how you'd do that, this is a video explaining the guidance and what it means. To transfer to the dealer, the gov created a portal, that will have to be filled out by the dealer and the taxpayer at time of sale. There's nothing to really talk about with regards to that. If you are leasing, you dont qualify

[@b3arwithm3]

I wonder how many dealer will sign up. Today most of the brands dont pass the 7500 back when leasing their cars

[@MinusYCore]

$7,500 on lease is only to lessor (and residuals are impacted by credit also). $7,500 for purchase is for/to buyer. If a dealership doesn't participate, consumers will go to one that does.

[@b3arwithm3]

@@MinusYCore it is not the dealership choice. Each brand applies that rebate differently. No Chevy dealer gives the rebate on the lease of the bolt.

[@MinusYCore]

@@b3arwithm3 I was referring to the point of sale purchase credit, not leases in regards to shopping around for a dealer.

[@b3arwithm3]

@@MinusYCore got you now 👍 I long for the day we don't have to deal with car salesmen anymore. Most of them are just faking idiots who treat customers like shit and are pretty dishonest as well.

[@michaelsyufy7733]

Needs hybrid option

[@nicks7241]

Sure seems like the 'loop hole' was intentional and there's a chance the guidance could be updated by the end of the year, irrespective if it was intentional or not.

[@MinusYCore]

See my top level comment for a contrasting point of view regarding what the laws says.

[@BeardedTeslaGuy]

Agreed, but this sort of thing always happens. Sometimes it's a bigger stretch than others. Will be interesting to see how this ends. Fingers crossed it sticks so that more people can take advantage of the full credit.

[@jameswon3259]

so buy tesla 2023 or wait 2024 ?

[@collinswearingen9051]

Love your podcast. Question, does this loophole work against Tesla and help the big 3 and others? We can’t transfer this credit to a Tesla dealer if we are buying straight from the manufacturer? Is this a concern. Interested to hear your thoughts.

[@BeardedTeslaGuy]

A dealer is defined in the legislation and I don’t believe it excludes Tesla

[@MinusYCore]

Tesla is an eligible entity (dealer) under the law: DEALER.-For purposes of this subsection, the term ‘dealer’ means a person licensed by a State, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, an Indian tribal government, or any Alaska Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m)) to engage in the sale of vehicles.

[@Purée-m7z]

@@BeardedTeslaGuy has Tesla mentioned their intention of allowing this at point of sale?

[@aayanarif1131]

What if your leasing your tesla? Will we still we able to use this loophole if it stands?

[@MinusYCore]

Leasing is a different part of the Inflation Reduction Act, and lacks most of the 30(D) restrictions

[@BeardedTeslaGuy]

Leasing is completely different. The credit is given to the bank, as they are the owner. Some banks apply that to the lease to lower the payments, some do not.

[@johnpoldo8817]

I want to lease a low cost EV, maybe Chevy Bolt or equivalent, through my business and make sure $7500 federal incentive is applied to lease fee. Can I do that now or must I wait until 2024?

[@MinusYCore]

Leases are under Commercial Clean Vehicle 45W, not #0D with is personal purchase. The CCV credit is more lenient and active now I believe, it goes to the company you lease from.

[@BeardedTeslaGuy]

You can do that. Just have to find a brand that is running a lease special that includes the full credit being applied to the lease.

[@DarkDiyosa]

Now, idk if I should get the Tesla this year still or wait until next year. If some may not be eligible for the full 7,500.

[@BeardedTeslaGuy]

some of them may lose their qualification next year and not get the full credit. So risky

[@ag4eng]

Can’t IRS change their mind later up to 7 years to go after recapture. The law still supports them, it’s just interpretation issued as guidance. Too confusing.

[@BeardedTeslaGuy]

I suppose, but they (congress) would not allow that to happen after the fact. They could change interpretation, but if they did, it would have to be after the fact as you wouldn't be able to go back after taxpayers after the fact. I mean they could, but it would be extremely rare for something like that to actually happen.

[@mrsoccergod5001]

Why would you transfer the credit to dealer

[@MinusYCore]

It acts as an additional down payment on purchase which lowers your load payments if financing. Otherwise, it offsets your tax liability and you either need to adjust withholding and/or get a refund at tax filing time. Under the IRS guidance transfer can also get you a higher credit than your tax liability.

[@BeardedTeslaGuy]

So you can get it at time of sale, meaning you’d finance less or pay less out of pocket if you were paying cash

[@BenBrand]

He answers that around 3:50

[@dustinpeters3109]

Don’t worry they will screw over the people who need this so they can afford a EV. I am retired from the military and I don’t pay tax on my retirement and I only pay taxes on my job. I only have like 1200 in tax liability. Sucks that rich get richer while working class people always get screwed.

[@RogerWilsonTodd]

You continue to refer to “Dealers,” implying manufacturers who don’t use dealers are exempt.

[@BeardedTeslaGuy]

thats not what that means. "Dealers" is called out and defined in the law, which is why I keep referring to them. Tesla is defined as a "Dealer" in this law.

[@wadedupree9299]

Can I use that credit next year to trade in my current Tesla for another? Hoping to offset being upside down on the trade.

[@MinusYCore]

It acts like additional down payment at time of purchase, so no reason you could not do that. However, vehicle eligibility for credit may change in 2024.

[@BeardedTeslaGuy]

Yes

[@rambojohn7118]

So wait a minute, you are saying that for buyers that are low income can’t get any of the $7500 if they buy or lease a EV ? So only EV’s are for the “Well To Do” people!

[@BeardedTeslaGuy]

the law states that you can only get as much of the credit as you have tax liability for. So "up to $7,500" if you have $7,500 you get all, if not you get less. The income cap is $300k for joint filers and $150k for individuals. If this guidance sticks, then everyone under those income caps gets the full $7,500

[@sirmontego2]

@@BeardedTeslaGuy Sorry, but the law doesn't actually say "the law states that you can only get as much of the credit as you have tax liability for" for 2024 tax credit transfers. Rather, the law, 26 USC Section 30D(g)(2)(C), says "in an amount equal to the credit otherwise allowable to such taxpayer". That amount is determined by subsections (a) and (b) and is $7,500 for nearly every vehicle. Notice that subsections (a) and (b) do not mention tax liability. So, for 2023 sales for people with $0 in tax liability, those people CAN claim the full $7,500, but they cannot USE that amount. Do not confuse "claim" and "use." Accordingly, for 2024 sales for people with $0 in tax liability, those people can get the full $7,500, as you described in your video.

[@onlyoneromeo]

Please define "recapture"

[@MinusYCore]

Recapture is when you must payback something you received. For instance, you take the $7,500 based on the expectation your income will be low enough to qualify (previous year's income was too high), however, you end up over the limit. In that case, the IRS recaptures the $7,500 you received by raising your tax liability $7,500 . It's common in business when depreciated items are sold at a price above their basis.

[@wilsonvalderrama1131]

@@MinusYCore if I qualified for this 7,500$ does it come back to me as Tax Return? or i can only used it to pay the dealer?.

[@BeardedTeslaGuy]

When you take more benefit than you were eligible for and the government takes that money back