EV purchase credit

Forum|Forum|4 years ago
March 14, 2022
2 replies
21 views

I just purchased an electric vehicle (March 2022) and would like to qualify for the purchase of the vehicle, as well as the installation of a charging station in my home when it comes time to file my 2022 taxes. I know that, since I usually get a small federal refund, it will probably be impossible to see any of that incentive, since the rebate would only reduce my tax payment.

My plan, then, is to refile my W4 to change my withholding for the remainder of 2022 so there is an actual tax burden to reduce at the end of the year. Is this the best way to reap the benefit of this incentive, or is there a more efficient way to do this?

MinhT1

Level 15

The electric vehicle credit is non-refundable, meaning that it can only reduce your tax liability to 0 and any excess is not refundable.

If you get a refund, this does not mean that you have no tax liability. Your tax liability is the tax that is calculated from your taxable income before deduction of the taxes withheld. You get a refund because your tax withheld is larger than your tax liability. When the electric vehicle is applied, it will reduce your tax liability and lead to a larger refund.

You should not change your withholding in form W-4. Changing form W-4 will only change your tax withholding, not your tax liability.

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