Anyone know whether the IRS considers any of the EV rebates to be taxable?

T

Texas22Step

Well-Known Member
I bought a new Clarity recently and successfully applied for a state “rebate,” but does anyone know whether the feds consider these payments to be federally taxable? My state collects the federal tax ID form with every rebate application.
 
As with any legal or tax matter, it gets complicated very quickly. Here’s the quick ans dirty:
My Googlefru shows that if it’s a tax credit then no. But if it’s a tax rebate and you have less tax liability than the rebate then it’s like a cash payment to you and is a capital gain. But be aware that legal opinions vary on this.
Best bet is to have your tax preparer guru advise you.

Full disclosure: I am not a tax lawyer and don’t pretend to be one or even play one on TV. I am not responsible for any incarceration cause by reading this post but will try to visit you in prison if they have a public charger.
 
KentuckyKen said:
As with any legal or tax matter, it gets complicated very quickly. Here’s the quick ans dirty:
My Googlefru shows that if it’s a tax credit then no. But if it’s a tax rebate and you have less tax liability than the rebate then it’s like a cash payment to you and is a capital gain. But be aware that legal opinions vary on this.
Best bet is to have your tax preparer guru advise you.

Full disclosure: I am not a tax lawyer and don’t pretend to be one or even play one on TV. I am not responsible for any incarceration cause by reading this post but will try to visit you in prison if they have a public charger.
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Thanks for your input, and yes, I can see how this can be complicated, especially since I am wondering about FEDERAL tax treatment of a STATE payment where the particular state making the payment has no state income tax to offset in the first place! Yikes!

Sent from my Moto G (5) Plus using Inside EVs mobile app
 
The local utility will provide a level 2 charger or $599. I assume that amount is meant to be below the 10-99 reporting level. I'm going to report to to my accountant as income and let him sort it.
 
I had a simliar type of question in another forum, related to tax credits on solar equipment. TurboTax indicates that since the state credit/rebate is not a manufacturer reduction in price (manufacturer rebate) it is federal taxable income. Here's the reference. But, like the advice from @KentuckyKen, you have consult with a CPA or tax attorney and NOT take the often incorrect or incomplete advice you get from Internet forums, including this one. The answer is potentially variable by individual circumstances, state tax code, and federal tax code, none of which are for the faint of heart.

https://ttlc.intuit.com/questions/4...icle-rebate-taxable-income-the-amount-is-2500
 
I got 1099-Misc for the Texas $2500 rebate. I did not know that we were supposed to pay taxes on it since it was a rebate. All googling says taxes needed to be paid for this since the entity paying the rebate is different from the entity selling the car. Bummer. I told everyone I had a $10K discount on this car. Apparently that was inaccurate.
 
Electra said:
Yes, you have have to pay taxes on the Texas rebate. Remember that IRS form you filled out? So it ends up being less than $2000 rebate.
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Yes, it is also my understanding that any "rebate" paid by a third-party (not by the manufacturer as a price reduction in the original purchase price) like a state agency is taxable income, at least for federal purposes. In Texas, the payor (TCEQ) calls it both a "rebate" and a "purchase or lease incentive" and issues a federal Form 1099 to recipients. However, the fact there is no state income tax in Texas does mitigate this whole thing a little. Other states with a state income tax may or may not tax similar payments made in their state. You'll need to check it out with a local tax professional, which is still probably a good idea anywhere you may live.
 
Texas22Step said:
Yes, it is also my understanding that any "rebate" paid by a third-party (not by the manufacturer as a price reduction in the original purchase price) like a state agency is taxable income, at least for federal purposes. In Texas, the payor (TCEQ) calls it both a "rebate" and a "purchase or lease incentive" and issues a federal Form 1099 to recipients. However, the fact there is no state income tax in Texas does mitigate this whole thing a little. Other states with a state income tax may or may not tax similar payments made in their state. You'll need to check it out with a local tax professional, which is still probably a good idea anywhere you may live.
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That is right, all we (Texans) need to worry is the federal portion of the tax. I see that Californian's have bigger issues with their own rebate.
 
Of note, our local utility (SMUD) offers $599 cash rebate (or a level 2 charger) for EV/PHEV vehicles. This keeps it one dollar below the federal reporting requirements for payments to non-corporations. That doesn't mean I don't owe taxes on it, just that SMUD won't be reporting it.
 
JulianClarity said:
I would think at least the federal part is not taxable, but I will read the fine print when I file my tax return later.
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Federal is definitely taxable. Regardless of what your CPA tells you (unfortunately). States will decide themselves if these are taxable or not.
 
leehinde said:
Of note, our local utility (SMUD) offers $599 cash rebate (or a level 2 charger) for EV/PHEV vehicles. This keeps it one dollar below the federal reporting requirements for payments to non-corporations. That doesn't mean I don't owe taxes on it, just that SMUD won't be reporting it.
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For federal taxes, IRS has an exception for local utilities. Anything energy-saving related rebates from utilities are tax exempt. If it is $600 or $6000 or $60000. In fact, I got close to $20,000 rebate from City of Austin for solar system, and it was neither reported nor taxed. However, if it were the state who gave the rebate (instead of local utility), then it would have been taxed since the exception is only for the utilities.

Of course one argument would be "is a charger energy saver?". The same question might be "is a solar panel energy saver?"
 
If your state gives a rebate, if you are asked for your Tax ID (which would be the social security number for an individual), then you will probably get a 1099-MISC form from the issuing authority.

If you get a 1099-MISC, then I am pretty sure that this needs to go on to your federal return as income. Now in states that have state taxes, maybe they don't worry about it, but 1099-MISC says it is income that is reported to IRS.

I know I get a 1099-MISC from Texas in the mail a couple of weeks ago, and that means that this has been reported to the IRS. Otherwise, why issue a 1099-MISC?
 
In fact you may also qualify for a deduction for the charger and installation. When I did my taxes (Turbo-Tax) it said that I should put in my data so I did.
 
oko said:
Federal is definitely taxable. Regardless of what your CPA tells you (unfortunately).
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I don't believe this to be true. On the federal side it's not a rebate at all. By definition it's a straight-up credit. It simply reduces your 2018 federal tax liability by $7,500. So at what point in the process does that get taxed?
 
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