I'm still quite confused about how to claim the entire EV Tax Credit of $7,500. Let's take a simple scenario: as an employee, my pay is $110,000 and my employer is withholding my federal taxes, which amounts to $20,000. When I file my returns next year, it is determined that I've to pay an additional taxes of $2,500. So, does that mean my tax obligation is $2,500 and even if I claim the non-refundable EV Tax Credit of $7,500, I get only $2,500 portion of it, which results in $0 owed to IRS? Or, my tax obligation is $22,500 (I already made payments of $20,000 via paycheck withholdings) and I can still claim the entire EV Tax Credit, resulting in a IRS refund of $5000 ($7,500 credit minus the additional taxes of $2,500). Basically my question is does the money I owe to IRS include the amount that was already withheld and paid by my employer?
