We just got an EV and understand that $7500 is federal tax credit, not refund. So we need to owe that much tax by the end of the year to benefit from it. We normally owe around $400-$500 on federal return so have to change my W4 by adding dependents. When I was submitting my W4 update I see it's showing the total $ amount we're claiming. I set up my new W4 so it showed $7000 at the bottom as total claiming.
My question is, since there's only 3 months left till the end of the year, how is that $7000 shown in the new W4 calculated? Does it mean $7000 taxes won't be paid starting today, or only 3 months worth of the $7000 ($1750) will be held for me?
Thank you!
