Federal Tax Credit

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Smartshot

Active member
Joined
Aug 30, 2011
Messages
30
Is the federal tax credit income dependent. Nissan advertises the the federal tax credit amount is a range of Zero To $7,500. Why is it a range? Is it based on your income then? Does this mean that the greater your income the smaller the credit?
 
Smartshot said:
Is the federal tax credit income dependent. Nissan advertises the the federal tax credit amount is a range of Zero To $7,500. Why is it a range? Is it based on your income then? Does this mean that the greater your income the smaller the credit?
Actually it's usually the opposite. Basically you have to owe that much in taxes in the first place to get the full amount back. So if you only have $3000 tax liability, for example, you will only get $3000 back. Those with lower incomes tend to have smaller tax liabilities and therefore can't take the full credit.
As for the credit itself though, it is not tied to income. Just battery size, and the LEAF has a large enough battery that it qualifies for the entire credit.
 
There are a number of other threads but here's what the IRS did to me. Line 54 was 7500

Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k

My 2cents
 
Smartshot said:
Is the federal tax credit income dependent. Nissan advertises the the federal tax credit amount is a range of Zero To $7,500. Why is it a range? Is it based on your income then? Does this mean that the greater your income the smaller the credit?

IRS credits back your taxes, so it actually works in reverse from what you said. If you don't have to pay more that $7500 in taxes for reported year, the less you earn, the less will be the credit.
Basically if you don't have to pay $7500 in federal taxes, IRS won't give you money, they can only let you pay less (by no more than $7500)
Lookup form 8936 on IRS website for more details about calculation.
you copy line 46 from 1040, less other tax credits claimed on 1040, if it is more than 7500, you claim 7500 credit, if it is less, no taxes that year (but it'll be less than 7500 refund)
Basically if your 1040 sais that you have to pay 7500 or more, you are fine. If less, you basically don't have to pay any taxes that year.

P.S. I'm not a tax adviser, so don't sue me :D
 
What I (and some others) have done is lease it instead.

Nissan gets the full tax credit, and the lease is based on the reduced cost. So even if you buy the car at the end of the 3 years, you will have taken advantage of the credit.

With the rate the technology is changing, and the tax credit (I would not have gotten any if I had bought it), the lease was a no brainer for me. Only problem now is that it may be tough to stay under 12,000 miles a year since we love it so much. If that doesn't happen, may buy it at the end of the lease after all.
 
harryjpowell said:
Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k
Yikes. :eek: I would definitely give them a call and try to clarify the situation ASAP. The IRS itself says that AMT (and therefore tentative minimum tax) should not affect the credit:
http://www.irs.gov/newsroom/article/0,,id=206871,00.html" onclick="window.open(this.href);return false;
Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT (Section 1144): Starting in 2009, the new law allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.
Sounds to me like someone at the IRS didn't get the memo in 2009.
 
harryjpowell said:
There are a number of other threads but here's what the IRS did to me. Line 54 was 7500

Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k

My 2cents

???

I thought this credit was NOT subject to AMT limitations at all !
 
harryjpowell said:
Line 54 was 7500. Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."
As others have said, it is not supposed to work that way, unless there is something else going on that you are not telling us.
  1. Verify that line 46 is at least 7,500. If not, that is the real reason for the limitation, and the IRS just gave you the wrong reason.
  2. Verify that line 53c is checked and that 8936 is next to the check box. If not, you made an error in filling the form, or you did something that confused your tax program, and that has confused the IRS.
  3. Verify that line 53 (to the right of the check box and the 8936) says 7,500.
  4. Check that nothing else is being claimed on lines 47 through 53. If anything else is, that may be the reason for the restriction.

Back to Smartshot's original question, lpickup answered it correctly, but just to clarify, your tax liability is not limited to what you pay on tax day; it is everything you owe for the year. For many people, most or all of that has been taken out of paychecks during the year. As an example, if you have $9,000 withheld during the year and you would normally get a $500 refund, your liability is $8,500 ($9,000 - $500). You can claim the whole $7,500, and get $8,000 back ($500 + $7,500) the spring after the year in which you buy the LEAF.

Ray
 
harryjpowell said:
There are a number of other threads but here's what the IRS did to me. Line 54 was 7500

Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k

My 2cents

If you did your own taxes you may want to seek professional advice for a second look.
 
Professional advice doesn't always work, btw. My tax preparer, who is using a software package I am not familiar with, had no experience with Form 8936. When she first completed it, her software showed a credit for me GREATER than $7,500 :!: I had to show her places in the IRS website that talks about the $credit per kWh for the Leaf's battery size (the battery size is large enough for the entire credit). She agreed with me and overrode her software and voila I got the full $7,500. :D
EVDRIVER said:
If you did your own taxes you may want to seek professional advice for a second look.
 
I am having the same issue. I don't owe AMT but I was told the EV credit could be shrunk by AMT and the IRS took my 7.5k credit down to a couple thousand. Any professional tax preparers who are familiar with the EV credit who can help?
 
tzzhc4 said:
I am having the same issue. I don't owe AMT but I was told the EV credit could be shrunk by AMT and the IRS took my 7.5k credit down to a couple thousand. Any professional tax preparers who are familiar with the EV credit who can help?
So you guys submitted your tax return with the 7.5K credit, but the IRS actually rejected your return and cut it down to a couple of thousands?

Are you using a tax software like TurboTax or something like that? If so, shouldn't the tax software catch these kinds of things before submitting to the IRS?
 
No, I go to an accountant I have know for years. He uses something from Intuit called Lancent(sp?). It didn't pick it up any issues and he could only see the TMT applied if he forced it if he had it use the older EV credit since it specifically appplies TMT. So not sure what's up. Sucks
 
tzzhc4 said:
I am having the same issue. I don't owe AMT but I was told the EV credit could be shrunk by AMT and the IRS took my 7.5k credit down to a couple thousand. Any professional tax preparers who are familiar with the EV credit who can help?
I am not a professional preparer, but I have the same suggestions as for harryjpowell, that he hasn't responded to:
  • Verify that line 46 is at least 7,500. If not, that rather than AMT, is the real reason for the limitation.
  • Verify that line 53c is checked and that 8936 has been written in next to the check box. If not, your accountant or his software program has made an error. There are other form numbers that could go there, but none of them are likely to give you as much of a credit as 8936.
  • Verify that line 53 (to the right of the check box and the 8936) says 7,500, as does line 15 on form 8936.
  • Check that nothing else is being claimed on lines 47 through 53. If anything else is, that may be the reason for the restriction.
If it isn't any of those things, then fight it.

Ray
 
planet4ever said:
I am not a professional preparer, but I have the same suggestions as for harryjpowell, that he hasn't responded to:
  • Verify that line 46 is at least 7,500. If not, that rather than AMT, is the real reason for the limitation.
  • Verify that line 53c is checked and that 8936 has been written in next to the check box. If not, your accountant or his software program has made an error. There are other form numbers that could go there, but none of them are likely to give you as much of a credit as 8936.
  • Verify that line 53 (to the right of the check box and the 8936) says 7,500, as does line 15 on form 8936.
  • Check that nothing else is being claimed on lines 47 through 53. If anything else is, that may be the reason for the restriction.
If it isn't any of those things, then fight it.

Ray

-Yes,well more than 7500
-Yes, checked and has 8936 listed
-Yes
-Nothing else on 47-53

Guess I will be.
 
Nissan should clarify that the $7,500 is a regressive rebate (if you purchase Leaf outright). You have to be at a certain income level (or greater) to receive the full $7,500. The tax code should be amended so that a person could claim over a three year (or greater) period, so that people with lower incomes (who really want an BEV) will receive the full $7,500.
 
dznit said:
Nissan should clarify that the $7,500 is a regressive rebate (if you purchase Leaf outright). You have to be at a certain income level (or greater) to receive the full $7,500. The tax code should be amended so that a person could claim over a three year (or greater) period, so that people with lower incomes (who really want an BEV) will receive the full $7,500.

I had enough tax liability to cover the full credit. So maybe they should clarify that you have to be greater than a certain income level but lower than another level to get the rebate if you purchase.
 
To planet's question
All verified.
Check box
correct form specified
exactly 7,500
Plenty of actual tax to use the whole credit

No AMT due by amt calculation

TurboTax online

IRS reduced the credit.
I've filed an amendment for one other item and asked to have the credit re calculated.
After that amendment gets processed I guess I'll start pressing for what the f they are reducing the credit for...
 
Same exact thing is happening to me. Got the same notice, they reduced my credit from 7,500 to 4,792.

-53c is checked and that 8936 is next to the check box with amount 7,500 on line 54
-I owe plenty for the tax credit to work (line 46 is higher than 7,500)
-I'm only claiming the 7,500 credit, no other credits
-I used turbo tax as I have for years, it did a 'final check' and found no errors

Anyone else have this resolved? I'm going to try to call the IRS tomorrow morning and will post what I find.

-Zarwin
 
I know this doesn't directly help anyone since I didn't have this problem (I filed somewhat early--maybe they saw a sudden jump in 8936 submissions and figured that no one is actually buying these EV things and so they ought to look into it!)

Anyway, due to some stock options that are expiring this year, which for 8 years were underwater but finally starting making some money these past 2 years, I had plenty of income in 2011 to be eligible for the AMT. I submitted the 8936 credit and received the full $7500 into my bank account in 2-3 weeks. I did NOT submit an EVSE credit (mine was free thanks to a utility incentive). I used TaxACT software. I don't think it matters, but my total refund was in the $8600 ballpark, so I was under that $10K figure that's been thrown around.

Like I said it doesn't directly help since I did not experience the problem you all are having, but it does give a data point.
 
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