How does the tax credit work for a new 2015 Nissan Leaf?

If I work as a 1099 (independent contractor) and owe $7000 in taxes next year, will the tax credit mean that I owe $0 in taxes? I'm looking into buying a brand new 2015 Nissan Leaf. A used 2013 with 12,000 miles is about $18,000 after taxes and fees but if I understood how the tax credit works, I'd be stupid to buy a used one.

What if I work for a company that withholds taxes from every check? If I recall correctly, I filled out a W2 or something like that. This means I'm an employee, not a contractor, right? So I should be eligible for the entire EV tax credit?

I am not a tax professional, but...

If you are an individual paying US income tax, I don't see what difference it makes if you are an employee, a contractor, or self-employed in order to take advantage of the credit.

However, if you're still unsure, you can always lease the car from NMAC then later buy it out for the residual. By leasing, the $7500 Federal credit is immediately passed on to you in the form of a correspondingly reduced Capitalized Cost (the price the leasing company pays the dealer). Note that some states may have different incentives for buying vs. leasing, so if you are considering this route make sure you don't short yourself in a different way.

To answer another part of your question, if you do buy, the credit is UP TO $7500. So if you owe only $7k in taxes for tax year 2015, but paid $6500 through withholdings and estimated tax payments, you will get a $6500 tax refund. You won't get an additional $1000 "free money."

Hi, thanks for the response. Just to clarify, I was listing two separate situations. One where I work as an independent contractor and one where I'm an employee. I read on the Tesla forums that if you work as a contractor, like I did last year, the EV tax credit cannot be applied to the self employment tax. Is this true? That tax is something like 15% of income if you are self employed as an independent contractor.

I work as an employee at a new company this year and they withhold my taxes so I should be fine. I was thinking of asking them to withhold less (or perhaps withhold zero) so that I'll have a tax liability at the end of the year so that I can make use of the full credit. Bad idea? Or is this normal?

Thanks.

dtocila said:

Hi, thanks for the response. Just to clarify, I was listing two separate situations. One where I work as an independent contractor and one where I'm an employee. I read on the Tesla forums that if you work as a contractor, like I did last year, the EV tax credit cannot be applied to the self employment tax. Is this true? That tax is something like 15% of income if you are self employed as an independent contractor.

I work as an employee at a new company this year and they withhold my taxes so I should be fine. I was thinking of asking them to withhold less (or perhaps withhold zero) so that I'll have a tax liability at the end of the year so that I can make use of the full credit. Bad idea? Or is this normal?

Thanks.

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You should talk to a tax professional about the contractor vs employee aspect of the credit.

As to amount of W2 withholding - this has absolutely no impact on the EV credit. IF you have the tax liability to cover the credit then you get the credit - if you had more withheld than is required to cover your liability after all is said and done, you get a refund. Having zero withheld or having 100% withheld won't change your actual tax liability. Tax liability is the amount you actually SHOULD pay based on income and other factors - the amount you owe or your refund is based on the liability and the total amount withheld. If you withold more than your liability you get a refund, if you withhold less then you have to pay the difference by April 15th of the following year.

Likely you are getting confused (as many folks do) with the 'non-refundable' nature of the EV credit. All this means is that the credit cannot exceed your actual tax liability - which is not the same thing as the refund you get or the check you write when filing your taxes.

Regarding the self-employment taxes (this is employee plus employer FICA: SSN + Medicare), I suspect you are out of luck, as the credit offsets income tax--not these other taxes. (I know in GA, there is a similar $5k EV credit that can be used over several years; not sure if the federal is a one-time thing or not.)

I am in a similar situation; I am an independent contractor, and bill clients through my single member LLC. (And I've spoken with my accountant about exactly this LEAF topic. But talk to yours regarding your situation.) Assuming you meet the 50% business mileage threshold, your accountant will probably advise you to have purchase (and pay) all the expenses through your company. That way, the expenses reduce the company income, and in turn your salary (and the resulting FICA portion).

I wouldn't worry about adjusting the withholding, unless you are trying to smooth out cash flow. The $7.5k is a credit against taxes due, just like any monies withheld (from paycheck) is a credit against taxes due. So you should be able to claim the entire credit if your taxes due exceeds $7.5k.

Simple Example (and assumes no deductions):
$60k filing single puts you in 25% bracket, w/$10856 in taxes due.
Say you withhold $1k per month.
You would have 12 + 7.5 = $19.5 credited against the 10.8 due, meaning you get a refund of 19500-10856 = $8644
You would not be able to claim the full $7.5k if taxes due didn't exceed $7.5k.

dtocila said:

Hi, thanks for the response. Just to clarify, I was listing two separate situations. One where I work as an independent contractor and one where I'm an employee. I read on the Tesla forums that if you work as a contractor, like I did last year, the EV tax credit cannot be applied to the self employment tax. Is this true? That tax is something like 15% of income if you are self employed as an independent contractor.

I work as an employee at a new company this year and they withhold my taxes so I should be fine. I was thinking of asking them to withhold less (or perhaps withhold zero) so that I'll have a tax liability at the end of the year so that I can make use of the full credit. Bad idea? Or is this normal?

Thanks.

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The Tesla folks are correct: "self employment tax" is the self employed version of FICA: Social Security and Medicare. Those are "payroll taxes" not "income taxes". Typically the employer pays half and the employee pays half. If you are self employed you pay both the employer and employee portions of the FICA tax. I think it comes to something like 15% of self employment income above around $300/year, subject to the income cap for Social Security.

Your withholding for actual income taxes has nothing to do with whether or not you can claim the tax credit. What matters is how much you pay in income (not payroll) taxes for the entire year. Whether you had them withheld or pay them in April makes no difference. If the tax on line 44 of form 1040 is $6000, then that's all you can claim of the EV credit. Doesn't matter if you had $5000 or $7000 withheld. If your tax is $7500 or more on line 44 you can claim the full EV tax credit, regardless of how much you had withheld. Your withholding just affects how much of a refund you get because it means that you have prepaid some of your income taxes.


Like the others here, I'm not a tax professional but I've been doing my own taxes for decades and although most of my income is unearned (interest, dividends, capital gains, retirement distributions), I do sometimes have a bit of earned income that pushes me over the self employment tax threshold. So, it's "been there, done that" for me.

Hope all this makes sense.

Thanks for all your fantastic help. I pulled the trigger on a lightly used 2013 Leaf that just came off a lease. Battery is in good shape, I got an extended bumper-to-bumper warranty included at a good price. All in all, $2700 less than their asking price of around $15,500. They sold it to me for a "loss." They got it from an auction in Michigan (I believe it was manufactured there) after the lease of 1.7 months expired or was cancelled. Carfax checked out, I test drove the car for a day and a half and I loved it.

Gonna pay it off within a year, hopefully, and then it'll be my car for work and errands and church and everything. My work commute is usually a total of 20-25 miles a day. I'm going to use the trickle charger until we move and I can install the 240v for the 5-hour charging. I'm really excited about the gas savings and maintenance savings, and I know I'll see more substantial savings once it's paid off soon.

I got a used one over a new one because I benefit from the savings of an EV faster than if I bought a new one, and the used one has only 12,000 miles (with great battery condition and good included warranty)

If I decide I hate this car after a month or two, I will admit it because I don't like being fake and justifying a bad purchase out of buyer's remorse. So far I love it and have not had any range anxiety because I know that if it says 51 miles, it means 51 miles and that's well over my commute for the next couple of days.

So far I love it and have not had any range anxiety because I know that if it says 51 miles, it means 51 miles and that's well over my commute for the next couple of days.

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Not to try to induce any range anxiety, but...that range estimate tends to only be accurate at the end of a trip, if ever, and only then if you drive under the same conditions for the whole trip. Still, you will get a good sense of how much range you have available if you use the % State Of Charge (SOC) display on the dash. You will probably have to use the button with the page icon on the left side of the dash to select that display option.

LeftieBiker said:

So far I love it and have not had any range anxiety because I know that if it says 51 miles, it means 51 miles and that's well over my commute for the next couple of days.

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Not to try to induce any range anxiety, but...that range estimate tends to only be accurate at the end of a trip, if ever, and only then if you drive under the same conditions for the whole trip. Still, you will get a good sense of how much range you have available if you use the % State Of Charge (SOC) display on the dash. You will probably have to use the button with the page icon on the left side of the dash to select that display option.

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Thanks for the tip. My dash isn't currently working because they need to order an SD card with the maps. So I will look at that when they get the card on Monday. But from what I understand, the range it says on the cluster is pretty accurate. Even if it's accurate within 5 miles or even 10 miles, I'd still feel super comfortable going to work even two or three days on a single full charge and maybe some light trickle charging one night.

Is it worth spending $1000 on installing the 240v charging? Can I get it for cheaper or should I stick with trickle charging if the trickle charging works for me?

dtocila said:

Is it worth spending $1000 on installing the 240v charging? Can I get it for cheaper or should I stick with trickle charging if the trickle charging works for me?

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If you're going to move soon, and can live with the longer charging time (30 miles/day is about the max I would recommend for someone relying only on L1/120 volt charging), you can hold off until you move somewhere more permanent.

Even if you don't need it, 240 volt charging is nice to have. I lived with L1 for the first 8 months and there were times I had to choose between taking my Leaf out for the evening, or taking it out in the morning, because the car would not be sufficiently charged while I slept. 240 volt charging allowed me to do both trips.

Once you do, if you want an EVSE that will charge your Leaf in 5 hours, you will want an EVSE of at least 30 amps. You can get those for as little as $600 (the Clipper Creek HCS-40 is $595), maybe less. No need to pay $1,000 + install cost for Nissan's "official" charging unit made by AeroVironment.

That assumes the Leaf you got has the 6.6 kW charging unit (any 2013 or newer Leaf SV/SL, and any Leaf S with the Quick Charge option). If it's not one of these, you won't get a faster charging speed using a 30 amp EVSE over a 16 amp model.

We are moving in about a month. The model I got has the second port for what I believe is the quickcharging cable. It's to the left of the port for the cable that came with the car. If I install an EVSE for 240v charging, would it come with a cable? Or do you use the same cable when plugging in to a 240v outlet?

dtocila said:

We are moving in about a month. The model I got has the second port for what I believe is the quickcharging cable. It's to the left of the port for the cable that came with the car. If I install an EVSE for 240v charging, would it come with a cable? Or do you use the same cable when plugging in to a 240v outlet?

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The port on the left side is the Quick Charging port. The cable used with that is considerably thicker and heavier than the cord used for 120-240 volt charging.

No matter which charging station you use, it will have the cable attached to it, just like a gas pump will have its own hose. That's the way EV charging stations are being deployed in North America (Europe is different).

Whatever you do, DO NOT plug the factory trickle charger into a 240 volt outlet unless you know for a fact it was properly modified for that sort of thing, like the units modified by EVSE Upgrade. If you do, you will destroy a $1000 EVSE and you will not be able to file a warranty claim with Nissan, who will specifically check for this damage if you complain the tricke charger is no longer working.

Thank you very much for your help! So if I buy a EVSE to use the left port for L2 charging, it should come with the bigger cable, right? Are warranties on these usually decent?

dtocila said:

Thank you very much for your help! So if I buy a EVSE to use the left port for L2 charging, it should come with the bigger cable, right? Are warranties on these usually decent?

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Your L2 charging using the same port as the L1 - both are AC.
The other larger port is for DCQC - you won't buy one of those most likely. If you are at a station that support DCQC it will have the cable there - not a "home" item (yet, ha!).

dtocila said:

Thank you very much for your help! So if I buy a EVSE to use the left port for L2 charging, it should come with the bigger cable, right? Are warranties on these usually decent?

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No, you can't buy a home quick charging station (they are very expensive). Both Level 1 (120 V) and Level 2 (240 V) charging use the same plug and cable, called a J1772. DCFC "Quick charging" is ~440 V DC and uses a much bigger plug and cable. As you look at the front of the car with the charge hatch open, the L1/L2 charge port is on the right and the DCFC port is on the left.

As others have said, the EVSE that came with the car is Level 1 (120 V, 12 Amps)*. It can be upgraded to Level 2 (240 V, probably 20 Amps) by EVSEupgrade.com. Or you can purchase a Level 2 EVSE from places like Home Depot or the internet and have it installed in your garage. How fast your car will charge depends on what model of LEAF you purchased. They come with 3.3 kW or 6.0 kW chargers, depending on the model and option package purchased. Since you have the second DCFC port your car has the 6.0 kW charger for regular Level 2 charging (they were packaged together). It can charge at 240 V, 27.5 Amps, assuming that the EVSE can supply that much current.

For home charging speed isn't as important as it is in charging away from home when you have to wait for the car. Even EVSEupgrade at 20 Amps is plenty fast for home charging. But if you use any L2 EVSE you will need a 240 V circuit. If you don't plan to stay in the house long you might be better off just using the L1 EVSE that came with the car. Be sure that the outlet you use has nothing else using the same circuit and that it is in good condition. If the outlet or plug get hot stop using them at once. It might be safest to have someone take a look at the outlet to make sure that it is wired correctly and is in good condition. If so, L1 charging is fine, albeit very slow.


* The EVSE that came with the car is Level 1 unless it has already been upgraded by EVSE Upgrade (unlikely). You can easily tell that it is level 1 if it has a standard 120 V plug on it. An upgraded EVSE will have a very different looking L6-30 plug on it.

Apologies, I am a little confused now. The car came with the trickle charger. If I want to charge with the second charge level, I need to install a charge station on the wall in my garage, right? Or do I just need to install a 240v outlet and get the upgraded cable? My trickle charge cable says that it takes 110-120 volts. Not 240. So I need to buy a separate cable once I install the outlet, right?

dtocila said:

Apologies, I am a little confused now.

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Go to this link: http://evseupgrade.com/ and read all about it.

And it's not a cable, it's an EVSE (Electric Vehicle Supply Equipment), which includes a cable and a bunch of other stuff.

dtocila said:

Thanks for all your fantastic help. I pulled the trigger on a lightly used 2013 Leaf that just came off a lease. Battery is in good shape, I got an extended bumper-to-bumper warranty included at a good price. All in all, $2700 less than their asking price of around $15,500. They sold it to me for a "loss." They got it from an auction in Michigan (I believe it was manufactured there) after the lease of 1.7 months expired or was cancelled. Carfax checked out, I test drove the car for a day and a half and I loved it.

Gonna pay it off within a year, hopefully, and then it'll be my car for work and errands and church and everything. My work commute is usually a total of 20-25 miles a day. I'm going to use the trickle charger until we move and I can install the 240v for the 5-hour charging. I'm really excited about the gas savings and maintenance savings, and I know I'll see more substantial savings once it's paid off soon.

I got a used one over a new one because I benefit from the savings of an EV faster than if I bought a new one, and the used one has only 12,000 miles (with great battery condition and good included warranty)

If I decide I hate this car after a month or two, I will admit it because I don't like being fake and justifying a bad purchase out of buyer's remorse. So far I love it and have not had any range anxiety because I know that if it says 51 miles, it means 51 miles and that's well over my commute for the next couple of days.

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Sounds like a great deal. Hope you enjoy it.

dtocila said:

Apologies, I am a little confused now. The car came with the trickle charger. If I want to charge with the second charge level, I need to install a charge station on the wall in my garage, right? Or do I just need to install a 240v outlet and get the upgraded cable?

My trickle charge cable says that it takes 110-120 volts. Not 240. So I need to buy a separate cable once I install the outlet, right?

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I think you are confusing terminology here. You're saying "cable" when you should be saying "EVSE." In order to connect your car to the electrical source, you need an intermediary device, not just a cord. For 100-250 volt charging, that intermediary device is called an EVSE, which is often incorrectly called a "charger." The trickle charger that came with your car is one form of an EVSE.

You are correct that the factory EVSE is only 120 volt. But you can make it 240 volt capable by sending it to EVSE Upgrade. Or you can buy a dedicated 240 volt EVSE. It all depends on what you what to spend, how fast you want to charge, what electric supply is available to you, what features you want, etc.

Thanks for the tips so far everyone. I love the car so far!

Can I keep the trickle charger cable and just order a separate 240 volt charger cable? That way I can keep the trickle charging cable in the trunk for emergencies and leave the 240v one at home once I install the 240v outlet. Also, the USB might be busted. When I connect my phone, it never successfully connects and it charges the phone for one second, stops charging, then charges it more for one second, and repeats this cycle. Since I have a bumper to bumper warranty, that should be covered right? Also, I was disappointed to find that the Bluetooth in this trim doesn't support audio streaming. So no music or Youtube streaming from my phone unless I use an aux cable. Which isn't really the end of the world because I was already using an aux cable in my Jeep.

Amazing car so far. Didn't put any gas! Driven a couple hundred miles already, most of them for fun. The car drives so smooth! It's a 2013 and I believe it's the base model with some extra packages. It doesn't have leather seats so it's not the SL, but it has the navigation and quick charging port (and heated seats front and back) so I think it's the S with extra features or perhaps the SV.