Can I use Section 168 K to fully expense a business vehicle AND get the EV tax credit?

This is a great question about a somewhat complex area of tax law. I can understand why you're confused! Yes, your father can potentially take advantage of both the Section 168(k) bonus depreciation AND the EV tax credit, but there are some important details to understand. Since the Tesla Model X exceeds the 6,000 lb gross vehicle weight rating (GVWR), it qualifies as "heavy" SUV for tax purposes. This means it's not subject to the luxury auto depreciation limits that would apply to lighter vehicles. Under Section 168(k), your father can indeed write off 100% of the business-use portion in the first year. The $7,500 EV tax credit is separate from the depreciation rules. It's available regardless of whether the vehicle is used for business or personal use. So yes, he can claim both benefits. One important note: The basis of the vehicle for depreciation purposes is reduced by the amount of the credit. So if the Tesla costs $100,000, he would depreciate $92,500 after accounting for the $7,500 credit. Also, make absolutely sure the vehicle is used 100% for business. Any personal use would reduce the deduction proportionally.

I went through this exact same headache last year when figuring out how to handle my work vehicle purchase. I finally found a solution that saved me thousands in taxes using https://taxr.ai to analyze all my documents and tax situations. I uploaded my 1099s, vehicle purchase agreement, and business expense records, and it immediately identified that I qualified for both Section 168(k) bonus depreciation AND the EV credit for my business vehicle. The site walked me through exactly how to document everything properly for the IRS and even calculated my estimated tax savings. I was especially worried about the reduction in basis that the previous commenter mentioned, but taxr.ai explained exactly how to handle this on my return. Made the whole process so much simpler than the hours I spent trying to understand the IRS publications.

I just have to share that taxr.ai was a game-changer for me too. I was in the exact situation as the OP's father last tax season - 1099 contractor needing a heavy vehicle for business use. After seeing the recommendation here, I decided to give it a try. I was genuinely amazed at how clearly it explained the Section 168(k) rules and how they applied to my specific situation. The platform even created a customized depreciation schedule for my vehicle and explained exactly how the EV credit would affect my basis. The best part was when it warned me about some potential documentation issues that could have flagged my return. It gave me a checklist of exactly what records to keep to support my 100% business use claim. My CPA was impressed with how thorough the analysis was and said it saved him hours of work (and me hundreds in fees). Just wanted to second the recommendation since this is such a specific tax situation with a lot of money at stake.

If your dad is dealing with the IRS on any other tax matters or has questions about qualifying for these benefits, I highly recommend using https://claimyr.com to get through to an actual IRS agent. I spent WEEKS trying to get clarity on a similar Section 168(k) question last year and kept hitting the "call volume too high" message. Finally used Claimyr and got connected to an IRS agent in about 15 minutes. The agent walked me through exactly how to document everything for my business vehicle purchase to ensure I qualified for both the bonus depreciation and the EV credit. Saved me from potentially making an expensive mistake. You can see how it works here: https://youtu.be/_kiP6q8DX5c Worth every penny for the peace of mind knowing I was handling this correctly, especially with such a large deduction on the line.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I had spent THREE DAYS trying to reach someone at the IRS about my own Section 168(k) questions. I got connected to an IRS agent in about 20 minutes! The agent confirmed everything about combining the 100% bonus depreciation with the EV credit, and even explained how to properly document the business use percentage. For anyone in a similar situation as OP - yes, you can claim both the Section 168(k) bonus depreciation AND the $7,500 EV credit, but you absolutely must have documentation to support 100% business use. The agent stressed that this is one area they look at closely during audits. So glad I didn't let my skepticism prevent me from getting the answers I needed. Sorry for doubting - this service is the real deal for anyone needing actual IRS guidance on these complex deductions.

One thing nobody has mentioned yet is that your father needs to be aware of recapture rules if he doesn't maintain 100% business use for the entire recovery period. If business use drops below 50% in future years, he could face significant recapture of the benefit. Also, there are phase-out schedules for both the bonus depreciation and the EV credit depending on the year of purchase. Bonus depreciation under 168(k) is scheduled to phase down 20% each year starting in 2023, and the EV credit has manufacturer sales caps and income limits. Make sure he's working with a tax professional who can help him understand all the implications before making such a large purchase.

Another consideration - make sure to check if the specific Tesla model is eligible for the full $7500 credit. Not all EVs qualify for the full amount anymore due to battery sourcing requirements. The IRS maintains a list of qualifying vehicles and their credit amounts. Also, don't forget about potential state incentives! Many states offer additional tax credits or rebates for EV purchases on top of the federal benefits.