I posted this on the PIP threads, too. A TDI owner told a Volt owner there's a tax on the tax credit. I questioned him on it and he says there is. How?
A federal tax credit is not considered "income" for federal income tax purposes. I don't live in a state with personal income taxes but I suppose if a state's income tax allows deductions for federal income taxes paid, then the credit would reduce that deduction and increase the state income tax liability.
One probably has to pay sales tax on the full pre-credit sale price. In that sense, the tax credit gets hit with sales tax. I wouldn't be otherwise concerned about what a TDI owner says about the opposition.
Here's what another poster just said. There are many state revenue departments that consider an IRS tax incentive on anything energy related as income. So if you get a $10k "tax credit" for buying a Volt or a solar panel array, your state may consider it as income and you'll have to pay the tax on it as such. I call that a sux donut...
...I call it a "state disincentive" but nobody has mentioned such a disincentive yet in my readings. Of couse I focus on PiP but have not heard this before. I would like to understand disincentives as well as incentives. I have not fired up Turbo Tax for 2012 yet, but if I have time I will see if VA case - and it would be us if anyone - does this. If there was a state tax on the credit we'd be talking maybe 6% or maybe $450 state tax for some folks on $7500 and maybe $150 on a PiP. I've probably bought 10 PiP's in TurboTax already (test cases). I just use my VW VIN number to get past the VIN input screen. PS- Actually I call it HGT = Hidden Green Tax
ok, thats him. does that situation apply to you? states vary in their handling of income. dont worry about him, worry about yourself. you are in NJ, one of the higher taxed states in certain areas so ya, you probably getting dinged in one way or another but since you live there, I am guessing you are "conditioned" to the pain... obtw; my sales tax rate is 9.1 % so the EV sales tax waiver did come in handy!
I made up a Virginia test case in Turbo Tax (2011) A single guy in Virginia making $150,000 >>Buying a Volt w/ $7500 Fed tax credit did NOT seem to effect VA tax liability (no change) >>Poor guy owes $32253 Fed Tax and $8314 VA Tax (before the Volt tax credit) Dave- Does the WA EV sales tax credit apply to PiP? I don't think I have any reports on WA PiP incentives.
no. pure EVs, EV accessories, batteries, etc. ONLY Prius incentives ended June 30, 2009 i think which means yes my "unpluggable" 2010 Prius was also sales tax free
Let's step back & just think about this for a second. There are many federal income tax credits. Have you, or have you heard of anyone, paying an additional tax of any sort on any of them? There are 8 specific credits listed on lines 47 through 53 of form 1040 and a blank space to insert another. Unless Mr. VW comes up with a source I wouldn't listen to him. However, this sounds like the setup to a joke. A TDI owner told a Volt owner there's a tax on the tax credit. "Wow", says the Volt owner, "I didn't know that." A Prius owner overhears the conversation and says, "Yes, it's very complicated but there are ways to avoid it." "There are?", asks the Volt owner, "How?" "Pay me to prepare your 1040." replies the Prius owner. As we say in this time of the year, many happy returns.
I've already gone through this when I got a tax credit for an '09 TD, I never paid any state tax on the credit. I questioned him on where he got this from, but he hasn't replied. A NJ based accountant that has a TDI, a Volt and solar power posted that he never heard of the state taxing federal credits.
Lets not give the state any new ideas of extracting more $$$ out of our pockets. Politicians love to dream up new ways of sucking our wallets dry. DBCassidy On the other hand, is a tax on a tax that far fetched? Think SSA deductions takened out of paychecks. Then, when you apply for SS, you are subjected to paying a tax on this. DBCassidy
Tax credits are a joke, when they use it as an incentive to buy a car. You still pay full price and still pay taxes on that $7500. If your income tax comes out to be returned to you in full, this credit is worthless. You don't get 7500 back from the government. Has anyone received a tax refund equal to the tax credit?
I belive P.T. Barnum said it best "A sucker is born every minute" When will people wise up? DBCassidy
