Bye, Bye 4xe tax credit for 2023 Wranglers

[4XEJeepOwner]

Thanks for the reply. I just talked to a tax person today for the first time. She said if it is in fact "non-refundable" then you need to owe $7,500 to get the full credit. If you owe $10, then the credit amount is only $10.

I think it just depends if the CNBC article is accurate in that the credit is "non-refundable" or they got that part wrong and it is a "refundable" credit.

I myself have not read the Inflation Act and all it's pages.

To be safe I may follow what the article suggested to increase my tax liability. That is, "investors can consider converting a pretax retirement account to a Roth, a type of after-tax account" --OR-- "Workers can also adjust the tax withholding on their paychecks, opting to withhold less and thereby increasing the taxes they owe." I didn't make money with my stocks sold this year, so that's not an option for me.

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[pantheman75]

"Owe" doesn't mean any negative balance you may have AFTER you've paid what you've withheld... it's what your TOTAL tax bill is before your tax withholdings are applied. Your "bill" isn't when you're short... it's the total amount you owe before your withholdings are applied. Think about it... if your scenario is correct the credit would have to be applied after your + or - balance has been totaled. That's not how taxes are done. There's no credit available to help pay your bill after a negative balance has been determined... your taxes already figured in any credits BEFORE you find out if you owe anything.

 

[Jeeperz Kreeperz]

The article later suggests, " Workers can also adjust the tax withholding on their paychecks, opting to withhold less and thereby increasing the taxes they owe."

This sentence from the article is incredibly misleading - given the fact that the article he’s writing about is related to an EV tax credit. The writer is technically correct, that reducing your withholding would result in a larger tax owed (or a smaller refund). But the tax credit is NOT based on what you owe at the end of your form 1040. It is based on your ”tax liability” for the year. This is NOT to be confused with the tax you owe (or refund you receive) at the end of your form 1040. As commented on above, that figure can be manipulated by changing your withholding on your paycheck, or your pension check, or your IRA distribution, or your SS benefits, etc. Adjusting withholding does NOT change your tax liability.

The other recommendations the author makes are actually useful (converting IRA to Roth, or realizing capital gains). If you’re retired, and past age 59 1/2, you could also consider IRA distributions for current spending. These suggestions all increase your income, and thus, increase your tax liability.

The EV credit is definitely non-refundable. You may be getting hung up on the term “non-refundable tax credit”. This does NOT mean that a non-refundable tax credit cannot increase your tax refund. It absolutely can. What it means is a non-refundable tax credit cannot result in a tax refund to you beyond what your tax liability is for the year (plus any tax payments or withholding you’ve made). A ”refundable credit”, on the other hand, means that your tax liability is irrelevant when it comes to that tax credit. Even if you have zero tax liability and zero tax payments, you could still get a check from Uncle Sam (a tax refund) for the full amount of a “refundable tax credit”. But with a “non-refundable tax credit”, your refund amount cannot exceed your tax liability plus payments.

I wrote another post about this here: https://www.jlwranglerforums.com/fo...eone-who-has-done-it-twice.63478/post-1461962

And one with some examples of withholding/tax liability here:
https://www.jlwranglerforums.com/fo...eage-epa-figures-published.68287/post-1442151

 

[4XEJeepOwner]

Thank you fellas, I learned a lot today.

 

[4xeRubicon]

It always amazes me how many people don’t understand how taxes work.

 

[4XEJeepOwner]

correct. I’ll be taking delivery in about 30 days on a 23 And getting the tax benefit.

It’s actually the date you take delivery. See the IRS page on this question here:

https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

Note the subheading: ”Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022” (italics mine)

This is in keeping with multiple other IRS rules related to vehicles that often use the start date as the date the vehicle was ”placed in service”.

So, unless we see some IRS guidance otherwise, there does not appear to be any way around this - not even paying the dealer 100% of the purchase price in cash at the time of order. If the vehicle is not delivered to you by 12/31/2022, it appears you will not receive the tax credit under the way the law is currently written.

As I’ve said in a prior post, if you have a 4xe on order and it appears the delivery will be delayed until after 12/31/2022, you might want to consider abandoning your order (even if you have to lose your deposit), simply so you can purchase a 4xe off a dealer lot, take delivery by 12/31/2022, and capture the full $7,500 credit. I’d rather lose $1,000 deposit, and capture a $7,500 tax credit, than keep my deposit, and lose the tax credit.

I'm playing around in TurboTax with my purchase date and in-use dates. Seems like if I put a date before mid-August then Turboax gives me the credit for my 2023 Wrangler 4XE. I believe mid-August was when the Inflation date passed. My purchase and in-use dates were in October.

 

[jmdwifi]

I thought people were trying to save the planet not getting me to pay for their keep. Fake hippies

 

[XX4XEXX]

Welcome to Uncle Scam

Hi! I'm new to the Forum. Just been driven my 2006 Rubicon Unlimited around Arizona with nothing on my mind. Thinking it's time to get a new Rubi 4xe since I have a monster solar system in my home and can charge the ev battery basically for free. I just seems to makes sense. Order new at under invoice from one of the forums/Ratbert's dealers and also get the $7,500 tax credit. Simple right? NOT! It appears that the Government, in an effort to make things better for us surfs have just blessed us with the newly passed "750 page Inflation Reduction Act, A.K.A. IRA". This Act seems to have just screwed us on all future ev 4xe tax credits with "new rules".
It seems that to qualify for future tax credit the cars (Wranglers) have to be produced in the USA. No problem, they are built in Ohio I am told. But wait the batteries must also be made in the USA. After a bunch of searching the internet I found the batteries are currently made by a company called Stellantis who produces their Jeep ev 4xe batteries in manufacturing plants in Korea, Hungary, China, and Malaysia. But wait, they have recently entered a JV (Joint Venture) with Samsung SDI and per a recently announcement they hope to add a second plant in Hungary and ramp production capacity in Malaysia. Isn't that special? No, still more news. The JV hopes to bring EV battery manufacturing to America in 2025. Humm?
On checking with the U.S. Department of Energy they have already evaluated the IRA and announced they have determined that only the below listed cars models qualify under the new rules for future tax credits. Are you sitting down? For 2022 models 26 models, "including three 4xe models" are listed as qualifying but 8 of the 26 models have met their manufactures "sales cap". For the 2023 models only 5 now qualify with two having met its sales cap. They are BMW 330e, 2023 Bolt EV, 2023 Cadillac Lyriq, 2023 Mercedes EQS SUV, 2023 Nissan Leaf. Yep, that's it folks. No more 4xe Wrangler tax credit..
O.K. I'm done. Please, please, please tell me I am wrong and that you "KNOW" the Wrangler is still eligible for the $7,500 tax credit. I am.... disappointed to say the least. I guess I am going to have to buy a 35K Nissan Leaf, whatever the hell that is, and 4 wheel the crap out of it in the Arizona desert until the wheels fall off. I just saw an image of at the new Leaf and it is kinda sexy. NOT!
L'il Ronnie in Arizona.

 

[JAKE.JEEPER]

Getting my 3rd and last $7,500 credit.
2021 Buy for $57.5k -$7500 = $50k Sold for $57k after 12,000 miles
2022 Buy for $60.5-$7500 = $54k Sold for $58k after 10,000 miles
2023 Bought for $64.5k - $7500 = $57k

So $46k all in for a 2023 Rubicon + 22k miles/2years on previous ones

My favorite vehicle ever

Thats how I felt about my 4xe HA. Sticker was $64,750 - employee pricing - $7500. Final result came in at "financing" (leased it) just over $52000. Sold my 22 Sahara at auction through my dealership I work for and pocketed the profit from it.

 

[Solo25]

Yea did my taxes on my 23 that I got in December and got the 7500$ credit . Latest I read was it will still be around thru 2023 but they were going to add the ability for a used phev credit either for 23 or 24

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