2023 Tesla EV tax credit for $0 income?

[devang304]

Hi,

I file taxes as single person. I voluntarily quit my job last year so my income for 2022 in $0. However, I just started a new job on 01/03/2023 with an income greater than $150,000. I plan to buy a Tesla with a delivery date of February 2023 but I was wondering how I can take benefit of the $7500 tax credit. According to the IRS website, I can use the AGI for the year I take delivery or the year prior whichever is lower. While filing tax return this year for 2022, my income will be $0 so I'm assuming my taxes will also be close to $0. However, when I file taxes in 2024 for my income in 2023 can I still use my 2022 AGI to get the $7500 tax credits?

[DoninGA]

Tesla electric vehicles are not eligible for the EV credit due to the Manufacturer sales cap met

Go to this website for eligible vehicles - https://www.fueleconomy.gov/feg/taxevb.shtml

[Vanessa A]

The EV credit is non refundable which means if you do not have a tax liability, you cannot claim the credit.  If you have $0 income, you would not have a tax liability. 

Also, the credit for the Tesla has been phased out so it is no longer eligible for the credit. 

[devang304]

So I see that Teslas are eligible for the new ev tax credit starting 2023. So if I buy in 2023, next year when I file my tax returns, I can use my 2022 AGI to be eligible right?

[DoninGA]

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@devang304 wrote:

So I see that Teslas are eligible for the new ev tax credit starting 2023. So if I buy in 2023, next year when I file my tax returns, I can use my 2022 AGI to be eligible right?

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No, your 2023 AGI is used on your 2023 tax return to determine your eligibility for the credit on a vehicle purchased in 2023.

[devang304]

This is what I see on the IRS website. "You may not claim the credit if your modified adjusted gross income (AGI) exceeds certain thresholds. This limitation is based on the lesser of your modified AGI for the year that the new clean vehicle was placed in service or for the preceding year." 

It says lesser of the modified AGI for the year the new new vehicle is placed in service or the preceding year. So wouldn't I be able to use the 2022 AGI for a vehicle ordered in 2023?

[Vanessa A]

No. If you have $0 income for 2022 and $0 tax liability, you cannot take the credit.  The credit is non refundable.  This means, if you do not have a tax liability for the year, you cannot take the credit. A non-refundable credit is not refundable.  It will only reduce the amount of taxes you owe for the year.  If you owe nothing, then the credit will not affect your return. 

[devang304]

Gotcha. Thanks a lot!