Anyone Else Place Last-Minute EV Orders to Lock In $7,500 Tax Credit?

[ridgebackpilot]

By the way, good luck trying to reach any dealership this weekend to convert your reservation to a firm order. Most of them, at least for EV brands, seem totally swamped and/or clueless.

I was able to easily convert my Rivian and Fisker orders to binding contracts. They have no dealers and their online ordering works well. Yet another nail in the coffin of the obsolete dealership model of car sales!

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[ridgebackpilot]

If you say so, but that's not what the IRA seems to provide for. It says that a binding purchase contract is simply treated as if you put the vehicle into service the day before the IRA becomes law. How will you claim a tax credit in 2023 or onwards that no longer exists?

Seems like you’re confounding two dates: The effective date you’re putting the car in service (for purposes of figuring your eligibility for the credit) and the actual date the car is purchased and placed into service. I suspect the tax credit can be taken in the latter year.

You’re also assuming tax credits can be claimed and used only in the year they’re earned. Not sure whether that’s actually the case or not? I’m not a tax lawyer but perhaps others here are?

 

[NJ_MachE]

Seems like you’re confounding two dates: The effective date you’re putting the car in service (for purposes of figuring your eligibility for the credit) and the actual date the car is purchased and placed into service. I suspect the tax credit can be taken in the latter year.

You’re also assuming tax credits can be claimed and used only in the year they’re earned. Not sure whether that’s actually the case or not? I’m not a tax lawyer but perhaps others here are?

In regards to your first point, I strongly suspect you are wrong. All the IRS cares about us in the vehicle in service date, and they will treat it as the day before the IRA is signed based on the statute. Claim it for 2022 taxes or I doubt you will be able to at all. And if you claim it and don't end up buying the car, well... Amend your return I guess?

I'm not assuming on your second point. It's a use or lose credit. https://ttlc.intuit.com/community/t...an-the-rest-of-the-credit-carry/00/146515/amp

 

[ridgebackpilot]

In regards to your first point, I strongly suspect you are wrong. All the IRS cares about us in the vehicle in service date, and they will treat it as the day before the IRA is signed based on the statute. Claim it for 2022 taxes or I doubt you will be able to at all.

Hahaha! How could anyone claim a tax credit for a year when the vehicle hasn’t even been built, paid for, or delivered?! By the end of 2022, I doubt we’ll even have VIN numbers for 2023 EVs we order today! And IRS Form 8936 requires a VIN number.

The bill isn’t suggesting that we’ll all be required to take the tax credit in 2022. That would be nonsensical. Rather, my read is that the bill is using the day prior to the President signing the bill as a “trigger date” for purposes of determining eligibility for the existing $7,500 tax credit. Here's the relevant language:

Anyone having a written binding contract to purchase prior to the date the President signs the bill, "may elect (at such time, and in such form and manner, as the Secretary of the Treasury, or the Secretary’s delegate, may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of this Act."

So the IRS will need to promulgate regulations regarding how this will work. One thing is certain: If you don't secure a written binding purchase contract before the President signs the bill, you have zero chance of securing the $7,500 tax credit unless both the purchaser and the vehicle happen to qualify.

 

[NJ_MachE]

Hahaha! How could anyone claim a tax credit for a year when the vehicle hasn’t even been built, paid for, or delivered?! By the end of 2022, I doubt we’ll even have VIN numbers for 2023 EVs we order today! And the relevant IRS form requires a VIN number.

The bill isn’t suggesting that we’ll all be required to take the tax credit in 2022. That would be nonsensical. Rather, the bill is using the day prior to the President signing the bill as a “trigger date” for purposes of determining eligibility for the existing $7,500 tax credit.

It's your money. I did what I can...

 

[ridgebackpilot]

It's your money. I did what I can...

Don't worry, misinterpretation of laws by non-lawyers who lack understanding of the nuances of statutes is commonplace. You're in good company!

 

[ChuckA]

Expect the IRS to issue guidelines describing the definition of “a written binding purchase contract”. My guess it’s the day you sign contracts, and take delivery.

 

[Regulus7]

Claim it for 2022 taxes or I doubt you will be able to at all. And if you claim it and don't end up buying the car, well... Amend your return I guess?
https://ttlc.intuit.com/community/t...an-the-rest-of-the-credit-carry/00/146515/amp

So this fisker $250 non refundable deposit gives me a firm order and I can deduct $7500 from my taxes even if the car is not delivered until 2024 (probably ) and of course I can back out and amend my return (yea right). So it’s a free $7250 tax cut to roll the dice. I looked up POTUS schedule. Not back in DC until Wednesday. So a Monday order would lock it in. Hehe. Hmmmm….

 

[Cm12]

It's your money. I did what I can...

I believe your interpretation is correct. The tax credit must still be claimed for year 2022. This is gonna be a huge mess for the IRS because we’re not gonna have VIN numbers to include on the forms - how we can document the purchase is TBD. The way the IRA is written, we can claim a tax credit for a vehicle in 2022, even if we don’t take delivery in 2022. That’s just inviting a ton of tax fraud due to a poorly-considered provision. That’s definitely not a surprise considering how hastily these bills are passed.

 

[WSoxFan22]

How could a company who produced zero cars in 2022 possibly be eligible for a tax rebate that was in place before they ever built a car?

 

[mateo]

So the IRS will need to promulgate regulations regarding how this will work. One thing is certain: If you don't secure a written binding purchase contract before the President signs the bill, you have zero chance of securing the $7,500 tax credit unless both the purchaser and the vehicle happen to qualify.

In the event that an EV is delivered in mid 2023, I wouldn't count on being able to claim this tax credit on your 2023 taxes when you file in 2024. The 8936 form you need to file your claim may simply not exist / be substantially changed. (Nobody in the government is thinking about these issues as hard as anybody on these forums.) In general, it's a bit odd in 2024 to be able to claim on 2023 taxes on a car that you "pretend placed into service" on August 2022. Nothing in the bill guarantees that extended behavior. They could easily say it only counts for your '22 taxes, just like now how you cannot claim a credit for a car placed into service 2 years prior.

The only "sure thing" (assuming you have a binding written contract) is that you take possession of the car prior to filing '22 taxes, even if that involves getting a filing extension late into the '23 year. You can typically get until October 15 to file your taxes. If I was in your position, that's what I would do if I was getting a qualifying (from transition clause) EV delivered between April 15 and October 15 (2023).

 

[Monke]

One could reserve
a Fisker Ocean for 2023 delivery
a Silverado EV for 2024 delivery (before price increase because of $7500 EV rebate eligibility?)
a Fisker Pear for late 2024 or early 2025 delivery ($22,500 after EV rebates and that is close to the price of a corolla in 2022)and
a Cybertruck for 2025-2026 delivery (possible price increase same as EV rebate?).

If the timing is perfect. That person will get a new EV every year for the next 4 years (2023, 2024, 2025, 2026).

 

[kennethjk]

Normally I would say that after signing a binding contract (assuming it’s really binding) you wouldn’t actually get the tax credit until the the year car is delivered and you take ownership, but the legislation as written doesn’t say that.

It says it will be treated as having been placed in service the day before enactment.

also if you claim the credit if taken, on your tax return, you need a VIN, so at the moment, without that your out of luck. I did not read the entire section on that issue.

I am sure there will be regulations giving further guidance. If the credit is given at time of purchase which is probable you wouldn’t get it until you bought the car anyway and that may be the cleanest way to handle.

 

[RickMachE]

So this fisker $250 non refundable deposit gives me a firm order and I can deduct $7500 from my taxes even if the car is not delivered until 2024 (probably ) and of course I can back out and amend my return (yea right). So it’s a free $7250 tax cut to roll the dice. I looked up POTUS schedule. Not back in DC until Wednesday. So a Monday order would lock it in. Hehe. Hmmmm….

No, you can't claim a tax credit if you don't yet own the vehicle.

 

[Chiefsfan]

Because my income is too high to qualify for the Federal tax credit under the Inflation Reduction Act, and 70 percent of EVs currently on the market likely won't qualify either, I placed a couple of written, binding purchase orders this weekend.

Under the transition provisions of the bill (pp. 393-394), which President Biden will sign into law next week, anyone who enters "into a written binding contract to purchase" before the bill is enacted (signed) will have the option of taking the $7,500 income tax credit under the old rules, no matter when the vehicle is eventually delivered.

Because Ford isn't accepting new orders for the F150 Lightning (except from existing reservation holders), I reserved a 2023 Rivian R1T and immediately converted my reservation to a binding order. That makes $100 of my $1,000 deposit non-refundable ($900 of my deposit remains fully refundable).

I also converted my reservation for a 2023 Fisker Ocean to a binding purchase agreement. That means my $250 deposit is now non-refundable. I'm considering doing the same thing for a Genesis GV60, although so far they haven't been as responsive as the other companies.

In no case does a binding purchase agreement obligate me to actually complete the purchase. But if I decide to do that, at least I'll have the option of taking advantage of the existing $7,500 Federal income tax credit under the pre-IRA rules.

Anyone else convert their EV reservations to binding purchase orders this weekend in anticipation of the President signing the bill next week?

What is it exactly mean to enter into a binding contract? How is that accomplished? Can you do it without a VIN?

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