Trying to figure out how to take full advantage of the $7,500 EV tax credit as I’m aware it’s non refundable and wondering if going federal tax exempt on my W4 for the year will help do that.
If I only work with one employer and make $72,000 in 2023 and take the standard deduction of $13,850 my taxable income is $58,150.
Based off my calculations for the 2023 tax bracket I would have a tax liability of $8,100.
I get paid monthly and each month my Federal Tax withheld is $700. My yearly Federal Tax withheld by my employer would be $8,400 ($700 x 12)
Situation A
If I claim Federal Tax exempt for the 2023 and keep that $8,400 throughout the year. Then when filing taxes in 2024 I would owe the full $8,100. But with the $7,500 EV Tax credit I would owe the difference of $600 ($8,100 - $7,500).
Situation B
If I continue to have Federal Tax withheld I will instead end up getting a refund of $300 ($8,400 - $8,100) forfeiting the $7,500 tax credit all together because I wouldn’t owe anything. Hence leaving net -$7,500 compared to Situation A.
If I understand correctly, in my situation going exempt could mean the difference between getting the tax credit or not hence Situation A would be ideal? Am I missing something here?
