Asterix2112

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All - I and putting a deposit down tomorrow for my Wrangler 4xe (it will be replacing my Cherokee Trailhawk), so I have been trolling these forums. I have noticed some confusion and misinformation about the tax credit. I have done it twice now, First for my BMW i3, and then a couple of years ago for my Chevy Bolt that I still have. So I thought I'd give some advice and some hints.

Yes the $7500 tax credit is really $7500, at least for the vast majority of people who are buying a $50k+ car. As long as you owe at least $7500 in tax you can take the full federal tax credit, and that is a full real $7500, which is very different from a deduction which just reduces your income. The easiest way to check is to look at your 2019 tax return and look for the line that says “This Is your total tax“ (it’s line 16 on the 2019 1040). As long as your "total tax" is greater than $7500 you will get the full $7500. For me it's $25k, well above $7500, so I have nothing to worry about. So unless you have a dozen kids or some weird businesses deductions or something odd, most people who are affording a car like a 4xe will have a tax liability well above $7500. (now if it's less than $7500 then you get a credit for whatever it is. if you owe $5000 you can get a $5000 credit, if you don’t owe taxes then you don't get anything). So lets say on a normal year you owe $25k in taxes and have $24k withheld, so you normally pay $1000 (which BTW is what you should do, getting a big refund just means you gave the IRS a year long interest free loan, but that's getting on a tangent). So if you did nothing different, with the $7500 credit you would owe only $17,500 in tax, minus the $24k you had withheld, you would get a $6500 refund instead of owing $1000.

Now none of us are going to get this car until Feb/March next year even if we already put down our deposit, this tax credit will reflect on your 2021 taxes that you pay in early 2022. So no, you cannot take this tax credit on the taxes that you are about to do in a couple of months. So basically, you have to ‘front’ this $7500 for a year before you actually can get the money. But there is a trick you can do that’s fully legal, and that I have done twice. You can change your withholdings so that you get less money withheld from your paycheck during all of 2021 (Form W-4). So this way instead of waiting till early 2022 you could get this money throughout all of 2021. What you do is change your withholding allowances so that you get enough for as many paychecks as you have left for the rest of the year to come fairly close to $7500 by your last paycheck in 2021. For instance, I get paid biweekly, and each withholding allowance is about $50 to me (yours may be very different, there are withholding calculators on the IRS website). So let's say I get my car March 1st, which leaves me about 20 biweekly paychecks left. $7500/20=$375. So to be a little conservative I will probably Add 6 to my withholding (The more allowances you claim on your form W-4, the less income tax will be withheld from each paycheck) which will give me roughly $300 more per paycheck. Now very important, if you do this you absolutely have to remember to reduce your withholdings back down at the beginning of the next year, 2022 in this case!!! (Otherwise you might find yourself with a huge bill and possible penalties in early 2023)

Hope that helps some. – John

PS - If you're looking for a good level 2 charger look at Clipper Creek. They make excellent chargers that are significantly cheaper than buying a charger through a dealer. I have had mine 5+ years, installed in one house in a carport, moved and installed in another in a garage and it has worked perfect since day 1.





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JSFoster75

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Here's another suggestion... Take out 2 loans...
1. First Loan = Price of Jeep minus $7,500
2. Second Loan = $7,500, Pay off this loan with the tax refund in 2022...

This will give you a much lower Jeep payment for the long haul...

My wife and I financed both our Jeeps through our Credit Union for 84 months at 2.89%, we do a bi-weekly payment then add about $100 - $110/payment/each extra. Ultimately this means we will pay the Jeeps off almost 1.5 years early but gives us flexibility in case one of our jobs goes South.

Additionally, we have both of our Jeep balances below trade-in value in just under 15 months. No negative equity! (Both of us had negative equity going into our Jeeps)
 

block

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great info thanks.... makes me want one even more .. lol
 
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Asterix2112

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Every news organization states it does (qualify for the full $7500), and based on other cars, it should (it BETTER, I just ordered mine!)
 

Geesmill

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The Clipper Creeks are nice level two chargers. If you are new to charging your vehicle before you purchase one outright check with your local electric utility or co-op. Our local co-op started an EV charger program and we ended up with a Chargepoint level two charger that is good for up to 50 amps. Not that we have to worry about that with the 4xe. I think this one ended up with retailed for $499.
 

multicam

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Thanks for this summary which breaks it down “barney style” as they say in my line of work. I won’t be getting a 4xE but will definitely refer back here to help explain to friends how the tax thing works.
 

plex

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All FCA cars qualified for full $7,500 credit, right now are Pacifica and 4xe, but GC hybrid is coming.
 

VNT

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So the Feds dont limit this to a one time per taxpayer??

I understand each OEM only gets 200000 of these kick backs, so I assume FCA has used up some on the Pacificas but some one mentioned they still have 180K left
 
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Asterix2112

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So the Feds dont limit this to a one time per taxpayer??
Yeah, I was a little surprised at that too. I got it for my BMW i3, and when I looked to trade it in for the Bolt I assumed I would not get it again. Nope, you can take it as many times as you want as long as its offered for that car! So yes, this will be my third time taking a $7500 credit for a car. Might as well take advantage while I can!
 

Chris Hall

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As of today, no Jeep vehicles are listed as eligible for the federal tax credit:

https://www.fueleconomy.gov/feg/taxevb.shtml

Is this just a lag on their site? Do we have confirmation that the 4xe will qualify?

I’m sharing - with permission - the text of an email I received this morning from fueleconomy.gov. That is the place where you will find what vehicles qualify for the $7,500 federal tax credit. I inquired when we might see the Wrangler 4XE added to the official list and this was their response. This is cross-posted from the Wrangler 4XE Fans group on Facebook.

——————————————————

Hello Chris,

Thank you for contacting us. The page you refer to about vehicles that qualify for the federal tax credit is updated as needed and is simply relayed from the IRS website:
https://www.irs.gov/businesses/irc-30d-new-qualified-plug-in-electric-drive-motor-vehicle-credit .

The IRS is the official source for this information and they are the ones who determine eligibility and administer the tax credits. We relay this information to our users but the IRS makes the determination and they will be the ones to list new vehicles first. According to the current rules as noted at the top if the IRS page in the link above, the Jeep Wrangler 4xe should qualify but it is not our place to make that determination. If/when the IRS does list the Wrangler 4Xe, it will probably be listed on the IRS website under FCA since the tax incentives are by manufacturer. We list them by brand to make them easier to find. Getting this vehicle listed as eligible for the federal tax credit is between Jeep/FCA and the IRS. You might consider contacting Jeep to see if they can tell you where they are in the process of getting it listed with the IRS. Once accepted, manufacturers receive a letter from the IRS stating eligibility and the credit amount. There may also be state or local incentives that could apply depending on where you live. You can find a listing of those at: https://afdc.energy.gov/laws/state

We have not yet received any certification data from the EPA on this vehicle yet which may be something the IRS is waiting for. Normally we receive batches of new data weekly from the EPA but during the holidays, the schedule isn’t as predictable and we may not get any new data for several weeks. The last update was on December 17th which is noted on our data download page:
https://www.fueleconomy.gov/feg/download.shtml . We won’t get any new data until the new year.

Unfortunately, there isn’t a data release schedule that we can refer to so we have no way of knowing which vehicles will be included in the next update until we actually receive the data so we really can’t say when a particular model will be posted. A couple things to keep in mind:

The release date is at the discretion of the manufacturer because they like to be the ones to release their data to the public and often coordinate that with media events especially for new models or revised models. For this reason, you will often find the EPA estimates posted on the manufacturer website or in media reports before we receive the data for posting. If they claim that they are EPA estimates, then you can be pretty confident that they are accurate and will match what we receive from the EPA because it comes from the same source.

Because the 2021 Wrangler 4xe is a plug-in hybrid, it may take a little longer than a conventional model due to the complexity of testing. The EPA is currently testing all plug-in vehicles at their facility in Ann Arbor, Michigan:
https://www.epa.gov/vehicle-and-fuel-emissions-testing and plug in vehicles have some unique testing procedures that differ from conventional vehicles: https://www.fueleconomy.gov/feg/pdfs/EPA test procedure for EVs-PHEVs-11-14-2017.pdf . Plug in hybrid testing and certification is the most complex. As soon as we receive the data, we will get it posted. Sorry we can’t give you a better answer but we have no way of knowing when that will be. I hope this is at least somewhat helpful.

Sincerely,

www.fueleconomy.gov
 

Chris Hall

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Federal Tax Credit Phase Out

Great post about the $7,500 federal tax incentive for the Wrangler 4XE. Any time we mention it, it's important to understand that receiving the full credit depends on your personal tax situation. So great job.

Another thing that is very important to understand is that the federal $7,500 credit is a phase out program per manufacturer. After a manufacturer hits 200,000 units, they are phased out of the program. Tesla and General Motors both hit their 200,000 in 2018.

Here's the not so good news. You'll note that I said General Motors and not Chevrolet. The program counts all vehicles under the parent company and not the individual brands. That puts Jeep under FCA. As of June, 2020, FCA is 7th on the list at 46,978. Every Fiat 500E, Pacifica PHEV and Wrangler 4XE will add to that total. They only have 153,022 left before hitting the phase out. When a manufacturer sells its 200,000th qualified vehicle, the tax credit is scheduled to wind down, reducing by half to $3,750 and then half again over a period of time before being reduced to nothing.

If you are thinking about waiting a while before buying, mark the website below and keep an eye on where FCA is. It could cost you an extra $7,500 if you wait too long. The current thought is that no other manufacturer will hit the 200,000 mark until 2022 but it might be good to keep this in mind. Jeep is planning on bringing the Compass 4XE and Renegade 4XE to the US at some point. While their batteries might not qualify for the full credit amount, that still pulls from their 200,000. As well, Mike Manley seems pretty committed to a lot of electrification at FCA. Some of those new vehicles may hit outside the US first but it's just a good idea to keep tabs on where FCA stands if you're in the wait-and-see stage.

https://evadoption.com/ev-sales/fed...lsgtjeE-0mey-A_nP2zK_7jRWyCt9o8-7msI1ro1KXZUU
 

phobos512

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Here's the not so good news. You'll note that I said General Motors and not Chevrolet. The program counts all vehicles under the parent company and not the individual brands. That puts Jeep under FCA. As of June, 2020, FCA is 7th on the list at 46,978. Every Fiat 500E, Pacifica PHEV and Wrangler 4XE will add to that total. They only have 153,022 left before hitting the phase out. When a manufacturer sells its 200,000th qualified vehicle, the tax credit is scheduled to wind down, reducing by half to $3,750 and then half again over a period of time before being reduced to nothing.
In 2018 the 500e and the Pacifica PHEV accounted for 9,312 vehicles (7,062 Pacifica); in 2019 6,443 (5,811 Pacifica; 2020 numbers aren't on energy.gov yet but given the pandemic and the industry reporting it's probably less than 2019). The 500e is not being sold in the US anymore and according to both CarGurus and AutoTrader there are no new ones in inventory in the US. The Wrangler over the lifetime of the JL has averaged 19257 vehicles sold per month per GoodCarBadCar. For the Pacifica from the same source, since the introduction of the current gen they've been selling at 8044/month on average. If we look at quantity of PHEVs vs. quantity of overall, that's less than a 10% take rate. The JL 4xe will probably be higher - 25%, or 4,814/month is probably still a very conservative estimate though (and note that the 2020 sales numbers were all well lower than prior years; 2021 will probably be similar, so the average isn't as useful since it'll be inflated vs. reality). Add that to the 600 ish that the Pacifica PHEV's been selling and you arrive at about 5,400 PHEVs per month. Divide that into your 153,022 number and you get 28 and a little bit months.

What you'll have to watch out for is the introduction of cheaper 4xe models on other vehicles in the Jeep line. Those are where you'll potentially see things eat into the numbers quicker. That won't be during calendar year 2021 though (for on sale dates) I don't think.
 

multicam

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I’m sharing - with permission - the text of an email I received this morning from fueleconomy.gov. That is the place where you will find what vehicles qualify for the $7,500 federal tax credit. I inquired when we might see the Wrangler 4XE added to the official list and this was their response. This is cross-posted from the Wrangler 4XE Fans group on Facebook.

——————————————————

Hello Chris,

Thank you for contacting us. The page you refer to about vehicles that qualify for the federal tax credit is updated as needed and is simply relayed from the IRS website:
https://www.irs.gov/businesses/irc-30d-new-qualified-plug-in-electric-drive-motor-vehicle-credit .

The IRS is the official source for this information and they are the ones who determine eligibility and administer the tax credits. We relay this information to our users but the IRS makes the determination and they will be the ones to list new vehicles first. According to the current rules as noted at the top if the IRS page in the link above, the Jeep Wrangler 4xe should qualify but it is not our place to make that determination. If/when the IRS does list the Wrangler 4Xe, it will probably be listed on the IRS website under FCA since the tax incentives are by manufacturer. We list them by brand to make them easier to find. Getting this vehicle listed as eligible for the federal tax credit is between Jeep/FCA and the IRS. You might consider contacting Jeep to see if they can tell you where they are in the process of getting it listed with the IRS. Once accepted, manufacturers receive a letter from the IRS stating eligibility and the credit amount. There may also be state or local incentives that could apply depending on where you live. You can find a listing of those at: https://afdc.energy.gov/laws/state

We have not yet received any certification data from the EPA on this vehicle yet which may be something the IRS is waiting for. Normally we receive batches of new data weekly from the EPA but during the holidays, the schedule isn’t as predictable and we may not get any new data for several weeks. The last update was on December 17th which is noted on our data download page:
https://www.fueleconomy.gov/feg/download.shtml . We won’t get any new data until the new year.

Unfortunately, there isn’t a data release schedule that we can refer to so we have no way of knowing which vehicles will be included in the next update until we actually receive the data so we really can’t say when a particular model will be posted. A couple things to keep in mind:

The release date is at the discretion of the manufacturer because they like to be the ones to release their data to the public and often coordinate that with media events especially for new models or revised models. For this reason, you will often find the EPA estimates posted on the manufacturer website or in media reports before we receive the data for posting. If they claim that they are EPA estimates, then you can be pretty confident that they are accurate and will match what we receive from the EPA because it comes from the same source.

Because the 2021 Wrangler 4xe is a plug-in hybrid, it may take a little longer than a conventional model due to the complexity of testing. The EPA is currently testing all plug-in vehicles at their facility in Ann Arbor, Michigan:
https://www.epa.gov/vehicle-and-fuel-emissions-testing and plug in vehicles have some unique testing procedures that differ from conventional vehicles: https://www.fueleconomy.gov/feg/pdfs/EPA test procedure for EVs-PHEVs-11-14-2017.pdf . Plug in hybrid testing and certification is the most complex. As soon as we receive the data, we will get it posted. Sorry we can’t give you a better answer but we have no way of knowing when that will be. I hope this is at least somewhat helpful.

Sincerely,

www.fueleconomy.gov
That’s an incredibly helpful and considerate response. It’s hard to believe that came from a government organization. The go-getter who wrote that needs to slow his or her roll. We can’t have the unwashed masses receiving this kind of response from a bureaucracy... they’ll start to expect it.
 

rayvonp

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I guess I won’t be getting one because I don’t owe the IRS so I must be broke.
 

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