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For an electric vehicle, what does a Tax Credits means? I am confused about this part, doest it mean i will get money back from the federal government?

 
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For an electric vehicle, what does a Tax Credits means? I am confused about this part, doest it mean i will get money back from the federal government?

A tax credit lowers your taxable income so you will pay less tax.  However, the electric car credit is a non-refundable credit and can only lower your taxable income to 0.  

 

There are two types of tax credits available for taxpayers: refundable and non-refundable. Both types offer you the chance to lower the amount of taxes you owe, but only refundable credits can also get you a tax refund when you don't owe any tax.

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Expert Alumni

For an electric vehicle, what does a Tax Credits means? I am confused about this part, doest it mean i will get money back from the federal government?

A tax credit lowers your taxable income so you will pay less tax.  However, the electric car credit is a non-refundable credit and can only lower your taxable income to 0.  

 

There are two types of tax credits available for taxpayers: refundable and non-refundable. Both types offer you the chance to lower the amount of taxes you owe, but only refundable credits can also get you a tax refund when you don't owe any tax.

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**Mark the post that answers your question by clicking on "Mark as Best Answer"

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For an electric vehicle, what does a Tax Credits means? I am confused about this part, doest it mean i will get money back from the federal government?

When I correct my tax credit to $1875 my tax refund actually refund increases by only $469. Any ideas as to why not $1875?

 

 

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For an electric vehicle, what does a Tax Credits means? I am confused about this part, doest it mean i will get money back from the federal government?

it may be a non refundable credit you are trying to add. Non-refundable credits serves to reduce your tax liability to "0" based off of your taxable income. Chances are your tax liability was only $469 before you applied that $1875 credit. When you applied the credit, only $469 could be claimed because that reduced your tax liability to "0" at this point. 

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For an electric vehicle, what does a Tax Credits means? I am confused about this part, doest it mean i will get money back from the federal government?

I spoke to someone at TurboTax and they informed me that I needed to leave the default credit at $7500 and not change it to $1875 as the program will do it automatically. What was happening is when I was changing the credit to $1875 the program was taking a percentage 25% it was lowering my refund to $469. (example- 7500 X 25% = 1875)

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