[thatbrian]

Hi, New to forum.

I am hopefully buying an in-stock RWD ID.4 Pro S tomorrow. I need an AWD vehicle, so I've put a deposit on one online.

Here is my plan:

Drive this RWD version until I get the RWD.

Sell/trade the RWD once the AWD comes in.

Get the $7,500 tax credit twice, which will more than offset my loss in selling the RWD.

My concern is regarding the tax credit. Can I get more than one in a year? Can I get one for 2021 and one for 2022 (if the AWD is delivered next year, which looks likely)

Thoughts?

 

[Lxtruong]

Hi, New to forum.

I am hopefully buying an in-stock RWD ID.4 Pro S tomorrow. I need an AWD vehicle, so I've put a deposit on one online.

Here is my plan:

Drive this RWD version until I get the RWD.

Sell/trade the RWD once the AWD comes in.

Get the $7,500 tax credit twice, which will more than offset my loss in selling the RWD.

My concern is regarding the tax credit. Can I get more than one in a year? Can I get one for 2021 and one for 2022 (if the AWD is delivered next year, which looks likely)

Thoughts?

1. You have to make sure you have sufficient tax liability to get the credit twice in one year.
2. I think you will still be losing money in this situation and potentially a lot of money. "Losing money" in this situation is compared against the scenario in which you just wait for an AWD or keep the RWD.

 

[thatbrian]

1. You have to make sure you have sufficient tax liability to get the credit twice in one year.
2. I think you will still be losing money in this situation and potentially a lot of money. "Losing money" in this situation is compared against the scenario in which you just wait for an AWD or keep the RWD.

Thanks for the reply.

I'm self employed, so I can control how much tax I pay in.

If you think I would be out more that 15k on the RWD after 6 months, maybe I shouldn't buy it.

 

[Lxtruong]

Thanks for the reply.

I'm self employed, so I can control how much tax I pay in.

If you think I would be out more that 15k on the RWD after 6 months, maybe I shouldn't buy it.

Let's just use some made up numbers to illustrate what I'm saying.

1. You buy a RWD at 45k - 7.5k = 37.5k net price.
2. You sell the RWD at 30k.
3. You buy the AWD at 50k - 7.5k = 42.5k net price.

If you do all three transactions you'll pay 45 + 50 - 30 - 7.5 - 7.5 = 50k and you will end up with a AWD. Even if you are out less than 15k on the RWD transaction, the above shows that if you don't buy the RWD and just buy the AWD you'll pay less than if you do all three transactions.

EDIT: obviously the above numbers show that you'll do fine if you can sell the used RWD for (but price - 7.5k) or more. It's a possibility but I don't know if I'd count on it.

 

[SunWizard]

I'm self employed, so I can control how much tax I pay in.

It doesn't matter how much estimated tax you pay in. It only matters the total amount of tax on your return from the tax table or formula.

 

[sprylo]

I'm self employed, so I can control how much tax I pay in.

It's not about how much you "pay in," it's about your total tax liability for the year, less deductions. You can't just decide to owe more tax for the year - that tax liability has to come from some sort of income. If you increase your quarterly estimated tax payments without increasing your tax liability, you're just giving the government a zero-interest loan until next April.

 

[thatbrian]

It's not about how much you "pay in," it's about your total tax liability for the year, less deductions. You can't just decide to owe more tax for the year - that tax liability has to come from some sort of income. If you increase your quarterly estimated tax payments without increasing your tax liability, you're just giving the government a zero-interest loan until next April.

This is very easy to calculate, and adjust for.

 

[thatbrian]

It doesn't matter how much estimated tax you pay in. It only matters the total amount of tax on your return from the tax table or formula.

Of course.

I make well into 6 figures, so I can buy 3 of these cars and receive a tex credit, should I be so inclined. That's not the issue.

My issue/question is, can I claim the credit multiple times, or not?

 

[Froggy]

Actually in some circumstances you can decide to owe more taxes. I would have been between one and two thousand short of the $7500. I decided to take a significant amount from a tax deferred 457 retirement account. It was subject to federal tax and that amount built my tax debt up to the full $7500. I would have needed to pay taxes on it eventually and I figured that they were only going to go higher. It also allowed me to pay down enough that I didn’t need GAPE insurance.

 

[thatbrian]

Actually in some circumstances you can decide to owe more taxes. I would have been between one and two thousand short of the $7500. I decided to take a significant amount from a tax deferred 457 retirement account. It was subject to federal tax and that amount built my tax debt up to the full $7500. I would have needed to pay taxes on it eventually and I figured that they were only going to go higher. It also allowed me to pay down enough that I didn’t need GAPE insurance.

Good idea. There are always creative ways to handle these things.

 

[mlsstl]

IRS Form 8936 has spots on it for two vehicles, and I didn't see anything in the instructions that limits you to one car. See https://www.irs.gov/pub/irs-pdf/f8936.pdf for the 8936 form and https://www.irs.gov/pub/irs-pdf/i8936.pdf for the instructions.

However, as with anything tax related, talk to your CPA or tax advisor. An internet forum for a car is not the place to get your tax advice.

 

[thatbrian]

IRS Form 8936 has spots on it for two vehicles, and I didn't see anything in the instructions that limits you to one car. See https://www.irs.gov/pub/irs-pdf/f8936.pdf for the 8936 form and https://www.irs.gov/pub/irs-pdf/i8936.pdf for the instructions.

However, as with anything tax related, talk to your CPA or tax advisor. An internet forum for a car is not the place to get your tax advice.

Thanks. That helps.

I've actually found better information on internet forms than I've gotten from doctors, lawyers, and accountants.

 

[wtatun]

…and there’s a continuation form to the 8936 in case you buy more than two qualifying EVs in the tax year.

 

[Nai3t]

Brian what's the vehicle sales tax in your area? How does this compare to buying a used EV and selling it for more or less what you paid for it?

 

[thatbrian]

Brian what's the vehicle sales tax in your area? How does this compare to buying a used EV and selling it for more or less what you paid for it?

6.35%

If you trade in, you save the trade in your sales tax is reduced by trade in amount.

Are you asking/suggesting I buy a used EV now until my order comes in?

If so, I don't think I would/could/ There is a shortage of used cars, so the prices are all inflated, and no $7500.

 

[Spin]

There might be different tax incentives in the new infrastructure bill Congress is debating now. They are discussing $12500 if the vehicle is manufactured in the US. Who knows what the final bill will look like but it might be a good idea to wait for the AWD manufactured here.

 

[thatbrian]

There might be different tax incentives in the new infrastructure bill Congress is debating now. They are discussing $12500 if the vehicle is manufactured in the US. Who knows what the final bill will look like but it might be a good idea to wait for the AWD manufactured here.

Interesting. Thanks.

With so many choices coming (Kia & Hyundai), it's tough to decide what to do, which is why I want to get the ID.4 now, and see how I like an EV, and also keep me in a car until the end of the year.

 

[Spin]

Interesting. Thanks.

With so many choices coming (Kia & Hyundai), it's tough to decide what to do, which is why I want to get the ID.4 now, and see how I like an EV, and also keep me in a car until the end of the year.

Maybe you should look for a used car? If you only need it until the end of the year you won't lose too much. A new car depreciates the most in the first year.

 

[thatbrian]

Maybe you should look for a used car? If you only need it until the end of the year you won't lose too much. A new car depreciates the most in the first year.

1) I would get $7,500 of free depreciation.

2) My trade in is worth $5-6,000 more now because of shortages of cars, so if it depreciates 12-15k, I am Okay with that.

 

[seageo]

Let's just use some made up numbers to illustrate what I'm saying.

1. You buy a RWD at 45k - 7.5k = 37.5k net price.
2. You sell the RWD at 30k.
3. You buy the AWD at 50k - 7.5k = 42.5k net price.

If you do all three transactions you'll pay 45 + 50 - 30 - 7.5 - 7.5 = 50k and you will end up with a AWD. Even if you are out less than 15k on the RWD transaction, the above shows that if you don't buy the RWD and just buy the AWD you'll pay less than if you do all three transactions.

EDIT: obviously the above numbers show that you'll do fine if you can sell the used RWD for (but price - 7.5k) or more. It's a possibility but I don't know if I'd count on it.

If these hit 7.5k in depreciation in less than a year while there is a car shortage, then VW has some big issues with demand...