EV Federal Credit and Alt. Fuel Vehicle Refueling Credit

This maybe of interest as it stands now if you take full Qualified Plug-in Electric Drive Motor Vehicle Credit (up to $7500) you probably won't be able to take Alternative Fuel Vehicle Refueling Property Credit (30% of cost) because of:

Line 17
Although you may not owe alternative minimum tax (AMT), you must still
figure the tentative minimum tax (TMT) to figure your credit

corrected error want should be won't

First, a typo. I had to read your first sentence three times before I realized you meant "probably won't" instead of "probably want".

But back to the issue, can you explain that a bit more? Isn't it true that if you are above certain thresholds you always have to figure TMT, just to see if AMT applies? If the TMT says yes, then you are required to file using AMT, whether or not you take the EVSE credit. If the TMT says no, ignoring the EVSE credit, I'd think that there is only a very small chance that the EVSE credit would push you over the line. And if you don't meet the threshold you shouldn't have to worry about it, EVSE credit or not.

I'm no tax lawyer, and I could be wrong, but that's the way I thought it worked.

Ray

You are completely right explaining TMT ans AMT. Income barely qualifying for full EV tax credit ($7500) is enough for TMT - yes, therefore you no longer have a chance for EVSE credit because of the way Evse credit is calculated (remaining part of regular tax - AMT) which always will be negative (no more credit possible)

EdmondLeaf said:

Income barely qualifying for full EV tax credit ($7500) is enough for TMT

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That doesn't make much sense to me, even for a single person. A single person would pay over $8K in taxes if they just had $48K taxable income. They'd have to have a gross income of over $80K to have AMT go over $8K. I guess it could happen if you have $30K or more deductions on Schedule A, but I wouldn't consider that anywhere close to typical.

I can't see how it would come anywhere close to being true for married people, unless you have a lot of tax shelters. Since I'm married I have looked at it from that perspective. I always end up paying 5-digit taxes, and I've never been caught by AMT, even though I dutifully calculate it each year.

Ray

EV credit calculation
Regular tax obligation - EV tax credit = remaining regular tax

EVSE credit calculation
remaining regular tax - CALCULATED AMT (Line 17 Although you may not owe alternative minimum tax (AMT), you must still
figure the tentative minimum tax (TMT) to figure your credit) = if negative you can't take EVSE credit if positive can take credit up to $1000


Disclaimer
May be different in your tax situation, however for me, married filling jointly, with fed tax in low 5 digits after taking EV credit, last line on EVSE form is about -$6K.

I did $48K and $60K single person simulation (all standard) EV OK EVSE no
$100K married jointly(same, 0 dependent) EV OK EVSE no
Maybe different for other people but that is what I got. That is not tax advice and only apply to my situation

planet4ever said:

EdmondLeaf said:

Income barely qualifying for full EV tax credit ($7500) is enough for TMT

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That doesn't make much sense to me, even for a single person. A single person would pay over $8K in taxes if they just had $48K taxable income. They'd have to have a gross income of over $80K to have AMT go over $8K. I guess it could happen if you have $30K or more deductions on Schedule A, but I wouldn't consider that anywhere close to typical.

I can't see how it would come anywhere close to being true for married people, unless you have a lot of tax shelters. Since I'm married I have looked at it from that perspective. I always end up paying 5-digit taxes, and I've never been caught by AMT, even though I dutifully calculate it each year.

Ray

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My experience from last year (EVSE was installed 12/10) mirrors EdmondLeaf's - I was not able to take the EVSE tax credit once TMT was computed.

mwalsh said:

My experience from last year (EVSE was installed 12/10) mirrors EdmondLeaf's - I was not able to take the EVSE tax credit once TMT was computed.

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AMT killed my EVSE tax credit as well (installed Dec 2010). Hoping for no surprises with my $7,500 credit come tax time.

Question: any chance that EVSE credit will be available in 2012? No chance that I will be eligible for this credit in 2011.

EdmondLeaf said:

No chance that I will be eligible for this credit in 2011.

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Why not? You can buy a charging dock and get it installed at any time. You don't have to have the car by year end to get the credit. AV or Blink probably won't do the installation until the car is about to arrive, but you don't have to use their installers, or even buy their charging docks.

But you need to get on this right away. The biggest hurdle may be getting a city inspection by year end.

Ray

Ray, I want my EV credit that is why.

planet4ever said:

EdmondLeaf said:

No chance that I will be eligible for this credit in 2011.

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Why not? You can buy a charging dock and get it installed at any time. You don't have to have the car by year end to get the credit. AV or Blink probably won't do the installation until the car is about to arrive, but you don't have to use their installers, or even buy their charging docks.

But you need to get on this right away. The biggest hurdle may be getting a city inspection by year end.

Ray

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Bah humbug! I was just doing my taxes and Turbo Tax kept telling me zero credit for the EVSE but didn't explain why. After reading this and other threads and running the worksheet myself, I now know I've been hit by the TMT clause on this credit. Boo, hiss! Can I skip claiming it this year and claim it next year instead? I think not - right?

http://schweikert.house.gov/News/DocumentSingle.aspx?DocumentID=273435
EXPIRING TAX PROVISIONS: A LOOK AT 2012
WHAT IS COMING DOWN THE PIKE NEXT YEAR TAX-WISE
Alternative fuel vehicle refueling property 12/31/2011

GeekEV said:

Bah humbug! I was just doing my taxes and Turbo Tax kept telling me zero credit for the EVSE but didn't explain why. After reading this and other threads and running the worksheet myself, I now know I've been hit by the TMT clause on this credit. Boo, hiss! Can I skip claiming it this year and claim it next year instead? I think not - right?

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GeekEV said:

Bah humbug! I was just doing my taxes and Turbo Tax kept telling me zero credit for the EVSE but didn't explain why.

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Yup, I just realized the same thing. Basically, there is NO EVSE CREDIT unless you (a) leased, or (b) bought the EVSE in a different year from the car. And, as EdmondLeaf points out, it's too late to do anything about it now. See my recent posts on the Tax credits for chargers are finished thread.

Ray

It is too late to do this now, but I have discussed and recommended this tactic to all on the MNL site in the past and it can work next year, should the situation fit.

I routinely transfer funds from my IRA to my Roth, which creates income. I typically over transfer -- then I adjust it downward so that I can stay within the 15% bracket -- or exceed it by a little. The IRS permits you to return any overage, if you do it by tax-filing time.
This year, I will be able to adjust so I can have enough income to qualify for both the EV and EVSE credits.

This has the additional advantage -- even in non EV years -- of ensuring that I grow the size of my ROTH and pay at the 15% rate.

thankyouOB said:

I routinely transfer funds from my IRA to my Roth, which creates income.

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But doesn't that also count as AMT income? If so, I don't see how it helps. Remember, what you must have is (tentative AMT) + $7500 < (standard tax).

Ray

planet4ever said:

thankyouOB said:

I routinely transfer funds from my IRA to my Roth, which creates income.

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But doesn't that also count as AMT income? If so, I don't see how it helps. Remember, what you must have is (tentative AMT) + $7500 < (standard tax).

Ray

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I would like clarity on both those points actually.

EVDRIVER said:

planet4ever said:

thankyouOB said:

I routinely transfer funds from my IRA to my Roth, which creates income.

Click to expand...

But doesn't that also count as AMT income? If so, I don't see how it helps. Remember, what you must have is (tentative AMT) + $7500 < (standard tax).

Ray

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I would like clarity on both those points actually.

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I dont, any longer, have oodles of salary income from my job, nor does the spouse, who runs a biz that makes some small amount each year. I am working, mostly at this point, to have health insurance. America being what it is, if you take a pill and are over 55, you pretty much cant buy insurance for under 1k a month. I do have investment income, cap gains, dividends, etc., but it can vary greatly.

So, what I am doing is trying, after sched b, charity, mortgage, interest on student loans, investment losses and other offsets, to have an AGI of 69k, which is the 2011 threshold for the 25% bracket. I am usually under that threshold, and so I am able to do an IRA-to-ROTH transfer, turning some IRA retirement money into taxable income so that it incurs a 15% tax. Once it is in the ROTH it is tax free on withdrawal, as the tax is already paid. This was especially useful during the period when I was unemployed and had even less earned income.

For the LEAF and EVSE year, I have moved an excess amount (call it 35k), so that I will have enough of a tax liability to get the full LEAF credit and I will be able to adjust the other, I presume, to get the EVSE credit.

The IRS allows you to transfer whatever you want from IRA to ROTH during the tax year and, at filing time, you are allowed to adjust it down, which I do if I find I have moved too much money and would incur AMT or have too much money in the 25% bracket. I usually end up leaving some income paid at 25% because, unlike Mitt, I am OK with paying a little more.

YMMV.

I dont use turbotax. I use a real tax person because of complexities such as this, which are not covered in the do-it-yourself manuals, webtools, etc. The tax fee is deductible.
Actually, YMWV.

thankyouOB said:

I dont use turbotax. I use a real tax person because of complexities such as this, which are not covered in the do-it-yourself manuals, webtools, etc.

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I don't use a "tax person", a do-it-yourself manual, a website, or any tax preparation program (unless a general purpose spreadsheet counts). I guess I'm a masochist, but I rather enjoy plowing through the IRS manuals and filling out the forms.

If your real tax person is worth his or her salt I suspect you are going to be informed that, regrettably, you will not be able to get a tax credit for your EVSE. It's not just a matter of adjusting your income up or down to some magic level. You would have to have a sizeable amount of some very weird sort of income that is ordinarily taxable but not subject to the alternate minimum tax.

This is assuming that you bought, not leased, your LEAF. For those of us who leased, we already have our $7500 credit, and the AMT limitation is much less likely to take the EVSE credit away from us.

Ray

Yep, like others. $7,500 credit for the car purchase, 0 for charging equipment.

And not because I didn't have enough tax liability - plenty of that.

Bill