Hi - I purchased a PHEV Dec 2023 and the State of Texas was offering a $2500 incentive under the TERP LDPLIP program. I applied and got a check in April 2024. At year-end, I was surprised to get a 1099 for this payment. Is this supposed to be taxable? I've seen conflicting answers both elsewhere on the internet and here some of which suggest that it may vary by state.
It seems to me that since I got the 1099, I need to enter the income somewhere or the IRS will flag it as unreported. At the same time, this wasn't really "free money" or money for performing a service - in order to get this I had to buy a car and in so doing incurred an expense of over $50,000. It would seem that expense ought to be allowable as an offset against the income (at least up to the amount of that income) which would render the incentive tax free. That seems reasonable to me because it could be viewed as a rebate of a portion of the purchase price. I just have no idea if it is actually correct, or how to best report it if it is? (Put the 1099 income onto a Sch C and then offset it with a portion of the vehicle purchase expense?)
Hoping that someone has a definitive answer because I'd rather not give up a chunk of the incentive if I don't have to, but it's also a pretty stupid thing to get into IRS trouble over.
Thanks in advance!
