Configured at $80,000 exactly - not a penny more. Risky?

[MilliM]

Long story short I know there are questions about how things will pan out in 2023 tax incentives, but for the purposes of finalizing my order I'm currently at EXACTLY $80,000.00 and signed the preorder agreement last year when it was offered by Rivian (put my reservation in April 2019).

I'm not one penny over, not one penny under. I can bring down my cost by either downgrading paint or eliminating under shield (to provide some breathing room), but wondering what others here would do? Roll the dice for exactly what I want at $80k on the nose or adjust down just in case?

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[astonius]

The language on irs.gov says "can't exceed $80k" before destination, meaning it's inclusive. You will be fine.

 

[Tango45]

If that's the price that will be listed as your MSRP, you (based on the interpretation of the wording "not exceed") should be good.

From the IRS:
In addition, the vehicle's manufacturer suggested retail price (MSRP) can't exceed:

• $80,000 for vans, sport utility vehicles and pickup trucks
• $55,000 for other vehicles

MSRP is the retail price of the automobile suggested by the manufacturer, including options, accessories and trim but excluding destination fees. It isn't necessarily the price you pay.

However, if you're banking on the PBA working for you, as I am, then the price of the vehicle doesn't matter.

Also note, under the new version, there are also income limits...

 

[Dark-Fx]

IRS guidance says "can't exceed"
https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after

Bill says "‘‘(A) IN GENERAL.—No credit shall be allowed under subsection (a) for a vehicle with a manufacturer’s suggested retail price in excess of the applicable limitation."

 

[MilliM]

However, if you're banking on the PBA working for you, as I am, then the price of the vehicle doesn't matter.

Very good point. I was confusing things...I was trying to both use the PBA and not exceed the $80k. Income limits blow me & most of us out of the water either way, so presumably a moot point.

FWIW, my concern was less about the verbiage (I understood $80,000.00 was eligible), and more about whether even a penny (or a few bucks) might somehow get tacked on by Rivian later in the process.

Thx all.

 

[astonius]

Very good point. I was confusing things...I was trying to both use the PBA and not exceed the $80k. Income limits blow me & most of us out of the water either way, so presumably a moot point.

FWIW, my concern was less about the verbiage (I understood $80,000.00 was eligible), and more about whether even a penny (or a few bucks) might somehow get tacked on by Rivian later in the process.

Thx all.

Don't bank on the PBA. The language implies that was only good for the window between 8/16/22 and 12/31/22.

My plan is to explore filing separately since my wife's income is below the individual limit.

 

[rkalbiar]

With PBA, still need to hit new income limits?

 

[CharonPDX]

Very good point. I was confusing things...I was trying to both use the PBA and not exceed the $80k. Income limits blow me & most of us out of the water either way, so presumably a moot point.

FWIW, my concern was less about the verbiage (I understood $80,000.00 was eligible), and more about whether even a penny (or a few bucks) might somehow get tacked on by Rivian later in the process.

Thx all.

Anything later in the process would be registration/delivery/etc that aren't included.

 

[Aroohoo]

Don't bank on the PBA. The language implies that was only good for the window between 8/16/22 and 12/31/22.

Signed in to say this, but you beat me to it.

The current guidance makes no mention of a PBA prior to 8/16 and the vehicle being placed into service post 1/1/2023.

https://www.irs.gov/credits-deductions/credits-for-new-electric-vehicles-purchased-in-2022-or-before

If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement.

If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, see Credit for New Clean Vehicles Purchased in 2023 and After.

I know this doesn't align with what many read into the bill language, but it is the current guidance. That said, there is this line about a similar credit for motorcycles in the instructions for form 8936 that might provide some hope:

Credit for two-wheeled vehicles.

The credit for qualified two-wheeled plug-in electric vehicles expired for vehicles acquired after 2021. However, if you acquired the two-wheeled vehicle in 2021, but placed it in service during 2022, you may still be able to claim the credit for 2022. Do not report two-wheeled vehicles acquired after 2021 on Form 8936 unless the credit is extended.

 

[Tango45]

Don't bank on the PBA. The language implies that was only good for the window between 8/16/22 and 12/31/22.

Edit: @Aroohoo , you beat me to it. I deleted most of what I said since we quoted the same thing. Here's the rest of what I had:

This leaves a group of us out there who had a binding contract prior to August 16, 2022, but took delivery (hopefully) in 2023. Looking at the way they draw a line at January 1, 2023 in that first sentence does not fill me with good thoughts.

In the end, I am still confident that I would be covered under post January 1, 2023 rules if I did as @astonius said and filed separately for TY2023, since my R1S config is below $80k. I would have to talk to my CPA to see if I lose anything by filing separately that won't be covered by the new credit. All of us not holding the Carabiner of Luck yet probably want to take a good look at the listed MSRP on our invoices and at our potential tax situations for TY23.

Thank you both for making me dig in on that.

 

[astonius]

Ugghhh... I just spent the last 20 minutes looking through the IRS pages to prove you wrong. I think I failed. In fact, I think I'm wrong in terms of thinking the PBA just automatically puts me in the pre-August 16th, 2022 rules area. You're right in that the language seems to imply a break effective January 1, 2023. In particular, this wording on this page concern me:

Purchase date vs. delivery date
If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement.

If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, see Credit for New Clean Vehicles Purchased in 2023 and After.

This leaves a group of us out there who had a binding contract prior to August 16, 2022, but took delivery (hopefully) in 2023. Looking at the way they draw a line at January 1, 2023 in that first sentence does not fill me with good thoughts.

In the end, I am still confident that I would be covered under post January 1, 2023 rules if I did as @astonius said and filed separately for TY2023, since my R1S config is below $80k. I would have to talk to my CPA to see if I lose anything by filing separately that won't be covered by the new credit.

Thank you for making me dig in on that.

Yeah, sorry to burst the bubble! I'm pretty bummed about it myself. I'm just hoping the workaround isn't completely negated by a higher tax burden for filing separately. Just have to see how the numbers play out come filing time.

One important detail: you can use the previous year's MAGI for eligibility. I may file our 2022 taxes separately since we'll likely make more in 2023. Not sure how it's affected by filing separately one year and jointly the next.

 

[runwithscissors]

I'm @ 81k for the R1S despite signing the PBA and should've changed my config on Jan 16th to 21's and underbody shield to get close to that for a supposed Apr-Jun delivery but I'm not even sure if that will work in terms of dates with these incentives. I would just buy the 20's afterwards if I received the $7.5k incentive and have 2 sets of wheels. I'm just concerned that any changes will mess up the timeline and then I'll end up with a config I don't really want with wheels and then not get the incentives anyways.

 

[Guy]

I'm @ 81k for the R1S despite signing the PBA and should've changed my config on Jan 16th to 21's and underbody shield to get close to that for a supposed Apr-Jun delivery but I'm not even sure if that will work in terms of dates with these incentives. I would just buy the 20's afterwards if I received the $7.5k incentive and have 2 sets of wheels. I'm just concerned that any changes will mess up the timeline and then I'll end up with a config I don't really want with wheels and then not get the incentives anyways.

Depending when you get it this year the credit may well only be the $3750 due to being made in America. The battery sourcing provisions are due to kick in in April (unless the IRS delays again) and it is unlikely Rivian will comply with that at this stage. remember the income limits are gross adjusted, so after medical and pension/401k contributions. So a significant income.

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