7500 Tax Credit?

[electric9925]

With tax filing beginning here in the US on January 15th I figured I’d start this thread with people’s experiences trying to get the 7500.
With the new law Taycan’s no longer qualify.

But many of us will fit into the transition rule, where we ordered the car (and had a binding agreement before the date cut off).

So just curious to see what people’s accountants have said in regards to the matter and how hopeful I should be about getting the credit.

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[Tooney]

In addition to tax credit for EV purchase/lease, there is separate US tax credit for installing EV charging/supply equipment.

 

[Payton48]

If you didn't take delivery in 2022, you're probably out of luck. IRS modified their language last week and put in a hard date of 12/31. Looks like anyone counting on having a binding contract but didn't complete the purchase in 2022 is screwed: https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after

 

[electric9925]

I just made it then, took delivery 12/12

If you didn't take delivery in 2022, you're probably out of luck. IRS modified their language last week and put in a hard date of 12/31. Looks like anyone counting on having a binding contract but didn't complete the purchase in 2022 is screwed: https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after

 

[Bresdo1962]

I took delivery 7/25/22 so think I am good for the full amount..

 

[RAHRCR]

If you didn't take delivery in 2022, you're probably out of luck. IRS modified their language last week and put in a hard date of 12/31. Looks like anyone counting on having a binding contract but didn't complete the purchase in 2022 is screwed: https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after

From the website:
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.

 

[WasserGKuehlt]

From the website:
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.

FFS, this leaves an unaddressed gap: binding contract before 8/16/22 but delivery after 1/1/23.

 

[RAHRCR]

FFS, this leaves an unaddressed gap: binding contract before 8/16/22 but delivery after 1/1/23.

No. It means those purchases are subject to the 2023 rules….which for many buyers leaves them SOL.

 

[rjdoc74]

I probably know the answer to this, but if I paid deposit AFTER 8/16/22 and took delivery in 2022, I am SOL. Correct?

 

[RAHRCR]

I probably know the answer to this, but if I paid deposit AFTER 8/16/22 and took delivery in 2022, I am SOL. Correct?

Based on the laws as written…yes unfortunately.

 

[WasserGKuehlt]

No. It means those purchases are subject to the 2023 rules….which for many buyers leaves them SOL.

From the page (and your own post)(emphasis mine): "If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, see ..."

That's not my case, and as currently written it really is a flow diagram with a missing path. Oh well, I did think that the original writing was too generous and so this isn't surprising, but it's not that hard to provide clarity.

 

[Tomato]

FFS, this leaves an unaddressed gap: binding contract before 8/16/22 but delivery after 1/1/23.

New law will apply in your case.

Correct me if I'm wrong but I think this is the correct breakdown:

Basically this: Take delivery before 8/16/22 = Old Law. Take delivery after 8/16/22 = New Law unless you fall under Case 3.

Case 1: Delivery before 8/16/22 = Old Law ($7500 credit)
Case 2: No binding contract before 8/16/22 and delivery after 8/16/22 = New Law ($0 credit)
Case 3: Binding contract before 8/16/22 and delivery by 12/31/22 = Old Law ($7500 credit)
Case 4: Binding contract before 8/16/22 and delivery after 12/31/22 = New Law ($0 credit)
Case 5: Binding contract after 8/16/22, regardless of delivery date = New Law ($0 credit)

$0 credit for Taycan in the New Law due to final assembly not in North America and over the MSRP limit. Pretty much the only thing in the New Law that Taycan meets is the size of the battery (7kw+). It doesn't meet the rest of the requirements.

 

[RKZ]

From the website:
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.

You have the dates correct. However, my CPA tells me (and emailed me volumes of supporting IRS rules) that IF you have a signed contract before August 16, '22 as you mentioned, a buyer still take delivery after 12/31/22 and qualify for the $7500 tax credit. There is no Jan 1 cutoff as you stated. Or so he claims. Fortunately, I took delivery in the third week of December so I'll not have to test that assertion.
I emphatically state I am not making any recommendation on how any of you treat this issue. Merely passing on what I've been told by a tax professional.

 

[JamesDD]

New law will apply in your case.

Correct me if I'm wrong but I think this is the correct breakdown:

Basically this: Take delivery before 8/16/22 = Old Law. Take delivery after 8/16/22 = New Law unless you fall under Case 3.

Case 1: Delivery before 8/16/22 = Old Law ($7500 credit)
Case 2: No binding contract before 8/16/22 and delivery after 8/16/22 = New Law ($0 credit)
Case 3: Binding contract before 8/16/22 and delivery by 12/31/22 = Old Law ($7500 credit)
Case 4: Binding contract before 8/16/22 and delivery after 12/31/22 = New Law ($0 credit)
Case 5: Binding contract after 8/16/22, regardless of delivery date = New Law ($0 credit)

$0 credit for Taycan in the New Law due to final assembly not in North America and over the MSRP limit. Pretty much the only thing in the New Law that Taycan meets is the size of the battery (7kw+). It doesn't meet the rest of the requirements.

Depending on the definition of ‘binding contract’ I think I fall in case 3. I have a build sheet with my name and address and a non-refundable deposit receipt (both pre-dating August 16th) but the deposit was less than 5%. The latest IRS document that added ‘purchase date vs delivery date’ no longer attempts to define the non-refundable deposit as equal to or greater than 5%.

 

[WasserGKuehlt]

Depending on the definition of ‘binding contract’ I think I fall in case 3. I have a build sheet with my name and address and a non-refundable deposit receipt (both pre-dating August 16th) but the deposit was less than 5%. The latest IRS document that added ‘purchase date vs delivery date’ no longer attempts to define the non-refundable deposit as equal to or greater than 5%.

The definition of the binding contract is in another area of the IRS document base, and was not specific to this scenario. That is, it's always been 5% of total value, and hasn't changed/won't change.

My beef with the guidance as written is that it translates into:

if (binding_agreement.Date < 8/16/22)
{
if (delivery.Date >= 8/16/22 && delivery.Date < 1/1/23)
{ // apply old rules }
}
else
{ // apply new rules }

The problem is the existence of the 'else'; if it's implicit, then pre-8/16 agreements with '23 deliveries are treated as fall-through, and are subject to the new rules. If it's explicit, then those deliveries are effectively no-ops. One would think 'else' clauses are explicit in law text.

Anyway, the amendment to limit deliveries to EOY '23 is new, and was no doubt introduced now that the tax season is starting. It does make sense, as you wouldn't want to honor ancient history, it's just that the entire situation is frustrating: a manufacturer that can't deliver cars according to their own timeline (or delivers some twice as fast as others), a law that's being rewritten repeatedly and retroactively.. (For my next rant, I'll get back to charging.)

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