Hello!
Friday's turbotax update will now recognize the VIN of the 2023 Volkswagen ID4 we purchased on March 6th 2023. Turbotax then requested the tentative credit amount and provided a link to fueleconomy.gov which, as expected, indicated a credit of $7500. When I entered the $7500 as the tentative credit amount turbo tax applied the entire credit to my taxes rather than just offsetting the approximately $1500 that I owed prior to inputting the tentative clean vehicle credit amount.
It is my understanding that clean vehicle credit is non-refundable. Is there something I don't understand about how the credit applies, or is this just another error that will get resolved in a future update?
Thanks in advance.
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The EV credit reduces your tax liability. Your tax liability is the total amount of tax on your income minus any non-refundable credits, such as the Child Tax Credit, saver’s credit, or dependent care credit, to name a few. It is different than the tax you owe.
If your tax withholdings and payments fell short of your tax liability for the year, the unpaid difference is the tax you owe. And if your withholdings and payments exceeded your tax liability, the difference is your tax refund.
Your federal tax liability amount is found on Form 1040 (line 24).
The EV credit reduces your tax liability. Your tax liability is the total amount of tax on your income minus any non-refundable credits, such as the Child Tax Credit, saver’s credit, or dependent care credit, to name a few. It is different than the tax you owe.
If your tax withholdings and payments fell short of your tax liability for the year, the unpaid difference is the tax you owe. And if your withholdings and payments exceeded your tax liability, the difference is your tax refund.
Your federal tax liability amount is found on Form 1040 (line 24).
MayaD,
Thanks very much for taking the time to clarify this for me. Good news for sure.
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