Tax incentives for a 2021 prime?

You file a Form 8936 and you receive a tax credit of $4502. So using this year's (2020) tax forms, as long as 1040 line 24 is at least $4502, the full amount will be credited. This is regardless of how much was withheld (line 25).

 

It's a credit to your tax liability for the year up to $4,502. Keep in mind this is much different than what you owe or get back when you file your taxes.

 

Let's say you made 100k last year and your tax bracket is 10%. Your tax liability for the year would be $10,000. The $4502 would be deducted from that and your tax liability for the year would be $5,498.

This means you'd owe the feds $5498 for the year. Each check you have some coming out of your check for the feds. If you put in more than $5498 for the year your get any extra back and without the credit they'd be expecting $10k for the year.

I've simplified it some based on a very basic tax situation so you'd use the line on your taxes mentioned in the first reply for your official tax liability for the year.

 

It's a federal tax credit. So, say, your tax liability is $2,500. Your tax liability will become zero after the tax credit. You will not receive a tax refund of $4,502 − $2,500 = $2,002. Any amount over your tax liability will be wasted.

 

Several states have tax deals or subsidies. Power companies do too (I got a state and a power company rebate).

I just did a quick search for Pennsylvania--you'll have to research this further:




Alternative Fuel Vehicles

 

If you can itemize your taxes, you also get to deduct the sales tax for your car, among other sales taxes, on your federal return.

 

It is too late for his 2020 tax forms being filled out now through this April.

Tax credits for a purchase today will be processed on his 2021 tax forms filed a year from now.

That line on his 2020 form is a good guide for how much credit he can get on the 2021 returns, if his income is stable from year to year. For some of us, the stability isn't present.

 

I have a related question:
I bought my car 14 months ago and got State and Federal tax credits. Can I get these again if I traded my car in on a new Prime?

 

Yes, on the federal.

As for the state, each one will have their own rules. They may also have a requirement of keeping the car a certain period of time, and selling it early means returning some or all of the incentive.

 

California prorates the CVRP rebate, and they will recapture the prorated amount if you sell it before 30 months.

These are the available incentives:

dealer discounts: up to $3,000 or perhaps more, depends on negotiating ability
trade-in benefits: depends on how clean you keep your car, how low the mileage is (7,000 miles is an approximate cutoff), and the dealer
loan benefits: why pay cash if you can get the 2.5%-interest-rate 5-year bank loans these days and not take all the rebates and credits as cash in your pocket instead
Toyota rebates: up to $4,000 or perhaps more, maximizing in December or January (if bought in January or later, will miss the federal tax credit for previous year)
California Clean Vehicle Rebate: $911, point-of-sale rebate
California CVRP rebate: $1,000, application needed, prorated if owned less than 30 months
Federal tax credit: $4,502, can't exceed your tax liability
sales-tax deduction on Federal tax return: only if you can itemize your deductions
other rebates and benefits: power-company rebates, local rebates, Federal tax credits and/or power-company rebates on Level 2 charging equipment
save the environment: protect the environment by driving a green car
save in fuel costs: 70 mpg is typical and you can have cheap EV driving as well
parking benefits: you get EV-parking privileges
look green: look nice driving a good-looking green car
loaded trims and a cool color option is available: you can get the Limited trim with all the extra safety and convenience features, and you can get the Blue Magnetism, which is a very cool aqua/turquoise that will set you apart from everyone else

 

Living in Central Calif there is an extra $2000 rebate from the San Joaquin Air District. Lucky me!

 

Thanks. I guess I didn't make that clear, should have said "for example, using ...".

 

Out of curiosity, what is the 7000 mile trade-in cutoff you mentioned?

I normally keep my vehicles for 10+ years, but the Prime with all its rebates/credits makes it tempting to consider flipping after a year of use. I think one drawback in California though is the sales tax is calculated on the selling price of the new vehicle even if there is a trade-in.

 

Right, you don't have the sales tax refunded in California. Only dealers are exempt from the sales tax. However, you can deduct the sales tax in your federal tax return if you can itemize your deductions. Registration fee in California is not prorated or refunded either—it carries on to the next owner.

Depreciation seems to accelerate after 7,000 miles.

 

Changing tax laws have radically changed my own permissible strategies; ie

Sales Tax Deduction Calculator

If you itemize deductions on Schedule A, your total deduction for state and local income, sales and property taxes is limited to a combined, total deduction of $10,000 ($5,000 if married filing separately).

You have the option of claiming either state and local income taxes or state and local sales taxes (you can’t claim both). If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid; however, your deduction is limited to $10,000 ($5,000 if married filing separately) for a combined, total of state and local income, sales and property taxes.

 

I think here in NY state I would need to keep the car for 2 years or I would have to pay back all or part of the $1100 state credit.
I was trying to crunch some numbers - With the new Toyota incentives, discounts and federal credit I might be able to trade my 2020 for a 2021 and it wouldn't cost me anything.

 

well I did my taxes through a software (not wanting to ad the name) ... was to get a little over 2k back... I did the new car plugin and that increased my refund by $4800'ish. I had to give make/model/VIN/date put into service / that up tick in the refund was a shock

Note filed working in TN ... permeant address austin Tx