Summary: I think the EV tax credit actually applies before the child tax credit. A portion of the child tax credit IS refundable beyond the total tax liability. Am I wrong?
Regarding combining the EV credit with the child tax credit, I keep seeing essentially this advice here: "...they [children] each would qualify for $2000 of child tax credit which would be subtracted from your tax liability before the EV credit is applied. "
I'm not sure that's correct. Looking at Form 8936, you put the EV credit in line 19 (e.g. $7500). Then in line 20 you put the tax amount from 1040 line 12b -- this is the tax BEFORE deducting the child tax credit. From that, you subtract the "personal credits" (entered in line 21 of 8936). Referring to form 8396 instructions for line 21, these personal credits consist of:
"the total, if any, credits from Schedule 3 (Form 1040
or 1040-SR), lines 1 through 4 (or Form 1040-NR, lines 46 through 48); Form 5695, line 30; Form 8910, line 15; and Schedule R, line 22."
None of that is the child tax credits.
Based on this, it seems to me the advice previously given in this thread is not correct. For example, say my tax liability (1040 line 12b) was $10,000. I think I could subtract the $7,500 EV credit, leaving $2500 of liability. If I had 4 kids, the full child tax credit would be $2,000 * 4 = $8,000. However, since this is more than my remaining tax liability (after the EV credit), I have to look at the REFUNDABLE amount of the child tax credit, which is $1400 each. In this case $1400 * 4 = $5600, so I could apply it to reduce my tax liability by up to $5600 BELOW zero.
Am I interpreting something wrong here? Thanks!
