I bought a new Ford Mustang Mach E in April from a car lot.
Tomorrow I will sell it for a check. (It’s fully paid off)
I will use that check to buy a new Mach E from another car lot. (I just want that bigger battery)
Can I claim two federal EV credits?
so can I get $15000 refund on this upcoming tax return?
Yes you "can" since each new car comes with it's own credit and there is no max per year or per lifetime limitation however the credit is NOT refundable so if you cannot use them both on one tax return then you lose the excess. Review your situation carefully to see if you may want to delay the purchase until 1/1 and maybe the sale until 12/31.
It doesn’t matter when you sell the used car.
If you want to make sure you will be entitled to the full credit for buying both cars in 2021, you will need to make sure that your tax liability exceeds the amount of the credit. Your tax liability is line 22 form 1040. Another way of saying it is, if you had $10,000 of withholding on your W-2, and received a $1000 refund, then your tax liability was $9000. If you had $10,000 of withholding on your W-2 and you owed $1000, then your tax liability was $11,000.
If you expect your tax liability to be less than $15,000, there are one or two things you could do to increase your tax liability for 2021. Then the credit would offset the extra tax. For example, if you converted some IRA funds to a Roth IRA, that creates taxable income. If you offset the tax with the EV credit, then you essentially convert the IRA for free and then withdraw money in the future tax-free since it is a Roth. You might also sell some in investments to realize your long-term capital gains, and then offset the gains with the EV credit. Just remember to wait at least 30 days before re-purchasing the same or similar investments.
Your tax liability is that which you owe despite what was withheld. Correct? Or is what you’re saying is you have to have more tax withheld. So if your income is such you owe $15,000 in federal tax, then you can qualify for both rebates even if your tax withheld is more or less. Is your gross income or agi that matters. Is this right?
Your tax liability is that which you owe despite what was withheld. Correct? Correct.
Or is what you’re saying is you have to have more tax withheld. Negative... withholding is immaterial.
So if your income is such you owe $15,000 in federal tax, then you can qualify for both rebates even if your tax withheld is more or less. The amount withheld is immaterial to being able to use the credits.
Is your gross income or agi that matters. Is this right? Actually it is taxable income that matters since that is what the tax liability is based on and what the credit can reduce.
The tax return is basically a long math problem so look at the form 1040 lines 15 thru 22.