Will the qualified plugin electric drive motor vehicle credit help me with Colo state and Federal Taxes?

[priusprime2017]

We have retired and our income is not as high.  Since I seem not be get the credit via federal taxes, can I claim car via state taxes?  Would I need to delete from and not claim the vehicle via Federal?

[CarolC]

It depends.  When you purchase an Electric Vehicle, the Tax Credits reduce dollar for dollar the amount of tax owed.  This applies to both federal and state income taxes.

However, if you do not have a tax liability, then there is no tax to reduce.  The credit cannot reduce your liability below zero.  And any unused portion of the credit is lost and cannot be carried forward.  However, some states allow taxpayers to carry forward any unused tax credit.  Colorado is not one of them.

I realize this may be too late, but when taking advantage of credits, it's a good time to remove money from your tax-deferred retirement plans.  Especially if your income is already low or you plan on it being reduced.  This will add taxable income to report and then you may get the full benefit of the tax credit.

Follow these steps below to complete only your state tax return in TurboTax.  Click "See entire answer" and follow the steps for option 2.

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