@acw380 wrote:
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.
Your tax liability is what you actually owe to the IRS over the entire year. If you had $6000 of paycheck withholding and get a $1000 refund, your liability was $5000. Likewise, if you had $4000 of withholding and you owed $1000 when you filed your return, your liability was $5000.
If you are asking how to raise your tax liability for 2021, you don't have much time left. Basically, you need to have more income or fewer tax deductions. If you itemize your deductions, you could (theoretically) delay your December mortgage payment until January to have less deductible interest (at the cost of your credit score of course) or you could delay end of year charity donations until 2022.
More income, well that's always the trick, isn't it. Assuming you can't go out and win the lottery in the next 28 days, about the only easy solution is to convert IRA money to a Roth IRA. You don't have to convert your entire account, if converting part will create the income you need.
If you are divorced and sharing custody, you could change up who claims the children as dependents. This is complicated, and fraught with potential problems, so should not be done without a complete understanding of the situation, and I probably shouldn't even have mentioned it.
If you want to buy the car and claim the credit in 2022, remember the child tax credit, dependent care credit are going back to normal and there is no 4th stimulus, so your tax liability might be higher next year (if kid credits are reducing your tax liability for 2021). You could also increase your income for 2022 by pre-paying tax deductible items like property taxes and charity donations in 2021. Another way to increase your taxable income for 2022 would be to change from making IRA or pre-tax 401(k) contributions and contribute to a Roth IRA or Roth option in your 401(k) plan instead. That way you still get the retirement savings, and you won't pay any tax on that money when you withdraw in the future, and you won't pay taxes now if you can cancel those taxes out with the EV credit. But there is probably not enough time left in 2021 for this strategy to help you claim the credit on a 2021 EV purchase.
