Not getting credit for Tesla Model S and charger

[Sam Khan]

I bought a new Tesla model S in 2022 but I am not getting any tax credit any idea why? I also installed a electric charger in my garage, I see I cannot get the credit for that either.  I thought I could get up to $6000 credit for Tesla Model S. Am I doing something wrong? 

[AnnetteB6]

For vehicles purchased in 2022, there were no Tesla models that had not already met the sales cap for the tax credit.  Take a look at the following information from the IRS:  Manufacturers and Models for New Qualified Clean Vehicles Purchased in 2022 and Before

As for the credit for the EV charger that is claimed on Form 8911, it seems to be common that the credit is often disallowed or calculated to be $0 without any explanation.  There are two possible reasons for this.  One, you must have a high enough tax liability in order to claim the credit since it is non-refundable and is only used to reduce your tax liability.  Or two, the tentative minimum tax calculation is causing it to be disallowed.

The tentative minimum tax is the Alternative Minimum Tax (AMT) which is calculated in parallel with the 'traditional' income tax calculation.  When your return is complete, it will be determined whether you are required to be subject to AMT or not.  Even though you may not be subject to AMT, if your tentative AMT tax is greater than your net regular tax, then the Form 8911 credit is disallowed.

If you can see your Form 8911, the amounts reported on lines 16 and 17 may explain why you are not eligible to claim the credit.  If Line 17 (tentative minimum tax) is greater than line 16 (net regular tax), then the credit is disallowed regardless of whether you are subject to Alternative Minimum Tax or not.

This situation is outlined in the IRS Instructions for Form 8911 if you care to read more.  This is the specific section to read -- Line 17.

Even though Form 8911 will not be included as part of your tax return because the credit is disallowed, you should be able to specify Form 8911 to be printed or previewed from the Print Center using TurboTax Online to take a look at the details or use Forms Mode to see it if you are using a CD/downloaded version of TurboTax.

[Sam Khan]

So there is no credit for any Tesla model in 2022? Just wasted money on Model S 🙂

[Sam Khan]

Will there be a credit in 2023? I see the following statement on Tesla website

$7,500 Federal Tax Credit

Customers who take delivery of a qualified new Tesla and meet all federal requirements are eligible for a tax credit up to $7,500.

Will I get $7500 credit in 2023?

[MichaelG81]

Vehicles Purchased in 2022 After August 16, 2022: Extra Requirement

Vehicles purchased between August 17 and December 31, 2022, must also have undergone final assembly in North America to qualify for the credit. To see if a specific vehicle meets the final assembly requirements:

• Note the vehicle’s Vehicle Identification Number (VIN)
• Go to the Department of Energy's page on Electric Vehicles with Final Assembly in North America
• Use the VIN Decoder tool under "Specific Assembly Location Based on VIN"

For vehicles purchased in 2023 or later, manufacturers must qualify under a different process put in place by the Inflation Reduction Act of 2022. 

If you own either a qualified all electric or hybrid, plug-in motor vehicle (which may be either a passenger vehicle or a light truck) you may be eligible to receive the Qualified Plug-in Electric Drive Motor Vehicle Credit reported on Form 8936. The credit ranges from $2,500, to $7,500, depending on battery capacity and manufacturer caps.

Note: The Inflation Reduction Act of 2022 changed the Qualified Plug-in Electric Drive Motor Vehicle Credit to the Clean Vehicle Credit and added a new requirement for final assembly in North America that took effect on August 17, 2022.

Qualifying conditions 

1. Battery size. An electric vehicle's battery size determines the amount of credit you may receive. Typically, the larger the battery, the larger the credit. For some models, the credit amount can fall well below $7,500.

So how can you determine what you’d qualify for in this area?

The IRS uses the following equation to determine the amount of credit:

(A) $2,500 for a minimum of a 5kWh battery pack

(B) + $417 for all battery packs

(C) + $417 per kWh of a battery pack greater than 5 kWh

 A + B + C =  X (Your federal tax credit amount)

Keep in mind the maximum amount you can receive for this specific tax credit is $7,500.

1. Manufacturer cap. When a manufacturer sells 200,000 total qualifying vehicles, no matter the model, the credit begins to reduce, or phase out.

Phase 1: After an automaker reaches the 200,000-car-threshold, the credit is cut in half, from $7,500 to $3,750, from the second quarter until the end of the third quarter.

Phase 2: For the next two quarters, it's cut in half again to $1,875, until the allowable credit is $0 one full year later after the phase-out begins.

Purchases of Tesla and General Motors vehicles are no longer eligible for the credit.

@Sam Khan