@venkat0544 wrote:
So what if the IRS owes me money meaning i get the tax refund from the IRS and would i still get full amount of $7500 of EV Tax Credit as well as whatever the the money which IRS owes me after filing jointly?
Sort of.
Your tax liability is what the IRS gets to keep after all is said and done. Suppose you paid $6000 by withholding and you get a $1000 refund. Your tax liability was $4000. Or suppose you paid $5000 by withholding and owed a further $1000 with your return; your tax liability for the year was the same $6000.
The maximum credit is $7500 or your tax liability, whichever is less. So in the example above, if you paid $6000 by withholding and you expect a $1000 refund, you would actually get a full refund of the $6000 withholding, but only $5000 would be the EV credit and the rest of the credit would be lost. In that example, if you had some way of temporarily raising your taxable income, you could apply the rest of the credit and not pay tax on whatever that income was. For example, selling stocks or other investments that have increased in value. Or, converting an IRA to a Roth IRA or a pre-tax 401k to a Roth 401k. That creates a tax bill (to be offset by the credit) and then your Roth investments are tax-free forever. But it must be completed before 12/29/23.)
