How do I make sure I can take full advantage of the current or upcoming EV tax credit? Is it as simple as updating 4(b) on my W4 to allow for an extra $7500 deduction?

Forum|Forum|4 years ago
December 2, 2021
1 reply
0 views

I plan on buying a new electric car next year. Although we do not have a guarantee on the new proposed bill of updated tax credits, I will still focus on grabbing the existing $7500 for an eligible vehicle. I never owe taxes and always get a refund. Can I just update my W4 to have a large deduction to make sure I get to use my full tax credit?

TurboTax Online

VolvoGirl

Level 15

No. It's not whether you get a refund or tax due. It's if you have a tax liability on your income. Look at your 1040 line 24 for total tax.

Critter-3

Level 15

Do NOT make any changes on the W-4 ... if you do and forget to put things back you will be a world of hurt next year.

What you need to do is make sure you have enough federal tax liability on the return to use the credit up completely ... what you don't use you lose. If needed increase your tax bill buy converting some IRAs to ROTHS or selling stock, etc.

acw380Author

Level 2

Right, I want to make sure I dont leave any on the table. I hadnt thought about converting IRAs over. Is there any other ways I can increase my tax liability (while not giving the government extra money)? I was thinking I need to defer paying taxes so I will owe something instead of getting my usual tax refund.