The Science of Sustainability

Life With The Leaf: Missing Out On The Federal Tax Credit

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One of the first big lessons I learned as an electric car early adopter didn't happen out on the road but rather in my tax guy’s office. The lesson was this: if you are going to buy a clean car vehicle, plan ahead.

Like many folks, I was counting on a number of tax credits and rebates to help me afford the Nissan Leaf. I have already received the state of California’s 2,500 dollar rebate (it took a little over two months). Also, Nissan sent me a $700 rebate to pay me back for having a fast charging port installed on my Leaf. Although there are no fast chargers out there yet, I guess it’s going to come in handy one day. But what I might not get is the federal tax credit.

2011 EV tax creditI thought the clean car federal tax credit of $7,500 for EVs was like the home buyers' credit from last year or like California’s solar panel credit — but it is not a refund credit. You have to set it up so you owe the federal government an amount, then they will take if off. I didn’t do that so after an early December tax appointment I rushed to increase my exemptions for my last two paychecks of the year. I scrambled to see where I could get some other income. Anyway, I am probably not going to even get half the credit which makes my Leaf much more expensive than I originally planned for. I blame myself for not researching this but it’s all a bit confusing. I also had not planned ahead on a home charger. I had PG&E come out to do a required EV inspection but I did not buy a charger before I bought the car. Thus my new shiny Leaf sat in my driveway, unused, for a few weeks.

Monday I’ll explain how I picked my home charger and how I got it and the installation for free.

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About the Author ()

Andrea is KQED's Senior Science Editor . Andrea was born in Los Angeles and discovered radio news through listening to her college radio station. With a curious mind and a love for telling stories, she set off for Tampa where she landed her first job as a reporter for Florida Public Radio. After three years reporting in an unbearably humid climate and a brief stint as a miscast opera reporter, Andrea returned to L.A. to work for public radio, then for television news and finally as a reporter for CBS radio. Andrea has been at KQED for over twelve years, working first as a producer for Forum, and then as the senior producer for The California Report. She is now KQED's Senior Science and Environment Editor and narrates the QUEST television program. Andrea says she feels lucky to cover emerging science and environmental trends in a place where geek is chic.
  • http://twitter.com/MrEnergyCzar MrEnergyCzar

    If you don't have any federal tax liability you won't benefit from any of the tax credit. Generally, if you make over $80K you'd benefit from the full $7,500 ev tax credit. Or in laymans terms, if you owed exactly $7,500 in federal taxes, you wouldn't owe anything that year. There's no point in purposely having taxes paid out just so you can lend the money to the government for a few months and then get it back in the spring…

  • http://jpwhitehome.wordpress.com JP White

    Don't confuse 'owing' the federal government and having a tax liability.

    If your tax liability exceeds $7500 but you paid say $0 in withholdings that year, you'll get the full $7,500 credit (in this extreme example you would have had to write a $7,500 check or more to the IRS for not withholding, the EV is a credit against that liability, so you would owe nothing and pay nothing.). But if your taxable income is low enough that you don't have a liability of $7,500 the benefit is reduced, even if you withheld $10,000, you wouldn't get the full credit.

    I ran the numbers through turbo-tax last weekend, I'm due the $7,500 back even though Uncle Sam owes me a few hundred in over-payment for the year aside from the EV tax credit.

    • andrea

      I still don't understand this. The problem is my witholdings were pulled out monthly and so i don't owe much at the end of the year. In order to take adv. of the tax credit i would have had to have very little to zero witholdings durning the year, right?

      • Jhon

        What you are saying makes no sense. If you had money withheld during the year, which you almost certainly would if you had a job, then you will get this money back as a tax return up to $7500. The way you were talking initially sounded like you did not have a job and therefore paid no taxes. In that case you would receive no tax return. In your case since you were paying taxes all year you will get this money back. Rushing to increase your exemptions on your last two paychecks didnt make any sense although it would have gotten you some of this money sooner.

  • Indyflick

    One way to create the tax liability you were looking for would have been to convert a portion of your IRA to a Roth IRA. Then when you retire you can use funds from your Roth IRA tax free. If your tax advisor didn't mention that, I think you should be looking for another tax advisor.

    • andrea

      But i would still have to pay the penalty fees which would be ten percent for feds and five percent for state. The penalty fees were waived last year but not this year. So don't think that's going to be worth it.

  • DeaneG

    No need to let your new Leaf sit in the driveway – it comes with a perfectly good, though slow, 120v charging adapter in the trunk!

  • andrea

    I was told by Nissan that i should only use the trickle charger in a dedicated 120v outlet and couldn't find one in my house that reached! Have other folks been told to use only a dedicated one?

    • Deane Gardner

      The reason Nissan tells you to use a dedicated outlet is that the Leaf will draw 12 amps from the 120v outlet while charging. If you are running something else substantial on the same circuit, like a toaster oven, vacuum cleaner, blow drier, or microwave oven, the circuit breaker will trip. You'll have to decide if this could present a problem in your case – it all depends on what else is powered by that circuit, which is why Nissan just tells you that you need a dedicated circuit. An additional clock radio and small tv, or one or two light bulbs on the same circuit should be no problem.

  • Michael

    "Also, Nissan sent me a $700 rebate to pay me back for having a fast charging port installed on my Leaf. "

    How did you get this credit?

  • Nick

    It's fairly clear that you don't have a grasp on how income taxes work :-/

  • Andrea

    Actually,

    it was our accountant that didn't have a grasp so we found someone else=

  • Diana

    Does anyone else feel like the word "rebate" is an inappropriate marketing ploy from Nissan? We definitely did not do our homework, thinking we would fill out a little card, send it in with proof of purchase and would receive a "rebate" check in return. We do not owe the feds any this year, so we do not get the "rebate" Nissan promised:(