Leaf Tax Credit Question (USA)

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OHaiii

New member
Joined
Nov 21, 2019
Messages
1
Hello,

Thinking of purchasing the Leaf here in California and thought I'd ask here since you guys have actually gone thru the process as the websites have conflicting information.

If they say for example there is a $5,000 federal tax credit, does that mean you only get that credit if you owe at the end of the year? I'm a regular W2 employee with no deductible expenses or a mortgage, so i usually end up receiving about $10k back from the federal return and $4k from CA state return each year. Does this mean the tax credit from buying the leaf will be $0 for me? It says somewhere that you only get the tax credit if you have a bill due to the IRS. Can you elaborate on how this all works? Thanks for any advice!
 
For the federal, it is a credit ($7500 currently) against the tax you owe. That you get a refund doesn't matter. Look at line 15 of your 2018 form 1040.

If you are currently getting a $10K refund each year, it means you are paying $10K more than the amount of tax you actually owe. If you owe at least $7500 in tax, then you would get a $17.5K refund.
 
OHaiii said:
Hello,

Thinking of purchasing the Leaf here in California and thought I'd ask here since you guys have actually gone thru the process as the websites have conflicting information.

If they say for example there is a $5,000 federal tax credit, does that mean you only get that credit if you owe at the end of the year? I'm a regular W2 employee with no deductible expenses or a mortgage, so i usually end up receiving about $10k back from the federal return and $4k from CA state return each year. Does this mean the tax credit from buying the leaf will be $0 for me? It says somewhere that you only get the tax credit if you have a bill due to the IRS. Can you elaborate on how this all works? Thanks for any advice!

No.

You need a basic course on taxation. What you pay or receive from the IRS when filing your return has NOTHING to do with your tax liability.

You need to seriously decrease your withholding. What you are doing is simply insane. Letting Uncle Sam hold 10 grand at zero interest is...INSANE!

Get your last paycheck from 2018 and tell me what your federal tax withholding was. Subtract that from your refund. that is your tax liability.
 
jlv is correct if you filed 2018 federal IRS form 1040: Line 15 is "Total tax", the total tax you owed in 2018 (it's line 61 if you filed 1040NR). If you had bought your Leaf in 2018 and that number was 7,800 or more, you would have gotten 7,800 back. If it was anything less, the "Total tax" is the maximum you would have received.

HOWEVER, your 2018 "Total tax" is only an estimate for your 2019 "Total tax". If your circumstances have changed -- more or less income, more or fewer dependents, a marriage or divorce, other nonrefundable credits, etc., you need to adjust that figure accordingly. It is your 2019 "Total tax" that matters, since you will be claiming the credit in 2019.

(This answer is based on my training as a volunteer tax preparer for AARP.)
 
Those over 59 1/2, with an IRA, can do a partial Roth conversion to create additional tax liability. Convert just enough of your traditional IRA to a Roth IRA to reach the $7500 tax liability. Say you are retired and buy a new Leaf, qualifying for the $7500 Federal tax credit. If your Federal tax liability is $6000, you would be forfeiting the extra $1500 of tax credit. Use the partial Roth conversion strategy to create the additional $1500 of tax liability. You'll have to pay tax on your IRA, eventually. Why not get it back in the form of an EV tax credit?
 
Dougie said:
How close is Nissan to the limit that will eliminate the federal tax incentive?
https://insideevs.com/features/337511/november-update-4-automakers-closest-to-losing-federal-tax-credit/ from Nov 2018. Even if they were close, there's the phaseout period discussed there.

It's not even at $0 for GM yet. GM has it at $1875 until end of March 2020.

https://www.fueleconomy.gov/feg/taxevb.shtml confirms that non-Tesla and non-GM still have the full tax credit amounts.

There would probably be an equivalent of https://www.irs.gov/newsroom/plug-in-electric-vehicle-manufacturer-crosses-200000-sold-threshold-tax-credit-for-eligible-consumers-begins-phase-down-on-april-1 once Nissan crosses 200K.
 
mkwilkes said:
This site says total Leaf US sales are around 133,000.

https://insideevs.com/news/347565/nissan-leaf-sales-outlook-us-2019/
That figure's old. You need to subtract out 3,636 and add 12,365 from https://insideevs.com/news/343998/monthly-plug-in-ev-sales-scorecard/. Should be just shy of 142K. Looks like Nissan's got awhile to go unless there's some change to the laws.

It is kind of sad to see how Nissan squandered their lead in the US.
 
Thanks for the info. I just didn't want to get 99% of the way through a purchase negotiation and have the incentive disappear on me!

Now just have to convince the dealer that a 2019 car in January 2020 can't actually be sold at MSRP. Wish me luck.
 
Dougie said:
Now just have to convince the dealer that a 2019 car in January 2020 can't actually be sold at MSRP. Wish me luck.
:eek: Approximately, where are you located?

Too bad https://electrek.co/best-electric-vehicle-prices/ (from http://ev-vin.blogspot.com/2017/02/current-discounts-on-selected-evs.html) is from last month.

Be prepared to walk, esp. given how heavily discounted Bolts are, for example. The cheapest car I pointed to at https://mynissanleaf.com/viewtopic.php?f=10&t=18907&p=576424#p576129 went away. https://www.chevroletoffremont.com/VehicleSearchResults?search=new&make=Chevrolet&model=Bolt%20EV&sort=salePrice%7Casc doesn't look great in terms of pricing right now. I bought from this dealer in Jan 2019 when the tax credit was still $7500 on GM EVs/PHEVs but now is only $1875.

https://www.criswellchevrolet.com/VehicleSearchResults?search=new&model=Bolt%20EV&sort=salePrice%7Casc looks pretty decent.
 
DaveinOlyWA said:
OHaiii said:
Hello,

Thinking of purchasing the Leaf here in California and thought I'd ask here since you guys have actually gone thru the process as the websites have conflicting information.

If they say for example there is a $5,000 federal tax credit, does that mean you only get that credit if you owe at the end of the year? I'm a regular W2 employee with no deductible expenses or a mortgage, so i usually end up receiving about $10k back from the federal return and $4k from CA state return each year. Does this mean the tax credit from buying the leaf will be $0 for me? It says somewhere that you only get the tax credit if you have a bill due to the IRS. Can you elaborate on how this all works? Thanks for any advice!

No.

You need a basic course on taxation. What you pay or receive from the IRS when filing your return has NOTHING to do with your tax liability.

You need to seriously decrease your withholding. What you are doing is simply insane. Letting Uncle Sam hold 10 grand at zero interest is...INSANE!
That's exactly what I was thinking.
 
Dougie said:
I just didn't want to get 99% of the way through a purchase negotiation and have the incentive disappear on me!
It doesn't work that way - the federal tax credit doesn't disappear.

As the law is currently written, when the manufacturer reaches 200K sales, the federal tax credit remains in full and only starts to phase-out (reduce by 50%) after the end of the 2nd quarter after reaching 200K sales.

Even if Nissan sold their 200,000th qualifying EV today, the full federal credit would be available apply for the next 5 1/2 months.

This is why Tesla delayed selling their 200,000th car in the US until July 2018, so that buyers had the full $7500 tax credit available through the end of Dec 2018. The credit remained available but cut in half ($3750) until the end of Jun 2019, where it was still available but halved again ($1875) until the end of 2019. Now it is finally gone.
 
Dougie said:
Thanks for the info. I just didn't want to get 99% of the way through a purchase negotiation and have the incentive disappear on me!

Now just have to convince the dealer that a 2019 car in January 2020 can't actually be sold at MSRP. Wish me luck.

That should be easy, for the OP who started this thread I know here in CA leaf's are going for well below MSRP, plus additional incentives. Even in CO I think you would be the same.

My closest dealer is showing five 2019 SV plus Leafs and discounts of upto 3900 off "MSRP". I would assume you can do better after negotiation, and this may not be as good as other dealers.
 
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