EV Tax Rebate After Marriage

[katsabutsa]

Hi! 

My fiancee requires a car and is planning on buying the Model 3 - her income is $95K and she qualifies for the California and Federal EV rebate. 

I am making beyond $300K gross and our marriage is in December.

I am wondering that if she purchases the vehicle right now (since she needs it) - will she still have the ability to claim the rebate since the car was purchased before the marriage, or during filling (since our gross as a joint fill would be beyond the threshold) it would make sense to file married but separate to have her rebate apply?

[Mike9241 · Accepted solution]

Credits for New Clean Vehicles Purchased in 2023 or After | Internal Revenue Service (irs.gov)

see the link you'll notice that she can use 2022 AGI (prior year) as long as it was under $150,000

the vehicle has to be titled in her name.

If your filing status changes between the preceding year and the current year, you may claim the new clean vehicle credit if your modified AGI is less than or equal to the threshold applicable to your filing status for the preceding year or current year.

if you tried MFS for 2023, it's allowed as long as her 2023 AGI is below the $150K, but jointly you might end up with an increase in tax liability more than the credit would save you. 

[xmasbaby0]

If you are considering filing MFS, there are things you should know about credits you can lose--especially if you have children:

If you are legally married at the end of 2023 your filing choices for tax year 2023  are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $27,700 (+$1500 for each spouse 65 or older)  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

 If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

[NCperson]

@katsabutsa simple. you are permitted to use 2022 or 2023 AGI, whichever is lower, to qualify.  So as long as she qualifies based on her 2022 income and her 2022  filing status, she is good to go.

I wouldn't even think about filing MFS..... likely to cost more money than it saves.  96% of married couples file Joint.