EV Tax Credit - Income Limit

[mrjoshtax]

I bought an EV in 2023 that is eligible for a 7500 tax credit. This was the main reason for my purchase.

Due to several errors throughout the year on my part, including overlooking phantom income from group term life insurance, and under-contributing to traditional 401k, it looks like I'll be about $91 over the income limit. I've already maximized the pre-tax HSA contribution for 2023 (3850). Also of note, I did not contribute to IRA in 2023 as it appears that will not reduce my taxable income.

My income in 2022 was also over the limit because I did not contribute to pretax accounts, not knowing I would be purchasing an EV or that the previous tax year was eligible.

I'm so close to being below the limit for both years. Am I just out of luck or do I have any options?

[Mike9241 · Accepted solution]

Ther is no special rule that allows someone slightly over the income limits to take the EV credit. so either you find a legitimate way to reduce your income or you are out of luck. You didn't provide much info about the 401(k). if it's employer spomnsired (salary reduction plan) you can't contribute in 2024 for 2023. however, if your 401(k) is for self-employment you have until the due date in 2024 to conribute the maximum allowed for 2023. 

[mrjoshtax]

It's employer-sponsored and at the beginning of the year I made the mistake of thinking I could later re-characterize any roth contributions. I maxed my 401k contributions for 2023, but ultimately limited what I could contribute to my tax-deferred account by contributing to roth at the beginning of the year. I guess this is probably useless extra info. Thanks for the response.