Is the California electric vehicle rebate taxable income? The amount is $2500.

Forum|Forum|7 years ago
June 5, 2019
2 replies
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And where in TurboTax Premier do I add this rebate?

TurboTax Free Edition Online

KatrinaB48

Level 15

Yes. The California electric vehicle rebates are taxable on both the federal return and the state of California return.

This is true because of IRC section 61: Gross income means all income from whatever source derived unless specifically excluded by law. A rebate is normally excluded from gross income when it is treated as a reduction in the purchase price of a product or service. However, the California electric vehicle rebate comes from the California Clean Vehicle Rebate Project (CVRP), which is administered by the California Center for Sustainable Energy for the California Air Resources Board. Therefore, the rebate is issued in a transaction wholly separate from the purchase of the vehicle and cannot really be considered a reduction in the purchase price of the vehicle.

For California purposes, California conforms to IRC section 61 and does not provide a specific exclusion for the CVRP rebate, so the rebate is taxable in California too.

This income will be entered on line 21, form 1040 as other income. Then it will be carried over to the state return. Please follow the directions below to enter your rebate income into the TurboTax. (see screenshots for reference)

Click the Federal tab
Click Income & Expenses
Scroll down to Less Common Income and select Miscellaneous Income (drop-down menu)
On the next screen, click start next to Other Reportable Income
On the next screen, select yes.
You are now on the income input screen. Enter the description and amount.

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gretairAuthor

Level 2

Thank you for replying. In what section of TurboTax do I apply the electric vehicle rebate?

Hanfresco

Level 2

According to CVRP Implementation Manual linked here, CVPR is NOT taxable.

The relevant section is on page 11 (pg 14 of the PDF) and reproduced below:

The CVRP rebate is not taxable income and the Administrator does not issue a 1099 for
your rebate. The Administrator cannot offer tax advice of any kind. If you have tax
related questions, please consult with your individual tax advisor.

KrisD15

Level 15

Rebates are not normally taxed, they reduce the purchase price, therefore reducing your cost and/or basis;

HOWEVER-

If you took any type of credit for the purchase of the electric vehicle, that might need to be addressed and the rebate would be classified as a recovery.

Please use the link below for more information.

IRS Pub 525

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