Trying to gauge if we will qualify for the full $7500 Federal Tax Credit if we purchase a new Electric Vehicle. I've read some replies on the internet that you can still qualify for full $7,500 tax credit even if you receive a federal tax refund.
Married filing jointly with 3 dependent children
Adjusted Gross Income = $86,000 with Standard Deduction of $24,000
Taxable income = $62,000
Tax table for MFJ = $7,000
Is the "Tax Liability" number that folks talk about the figure that I get from the Income Tax Table($7,000 in this example)?
If so, I assume I can receive $7,000 tax credit even if I get a refund in that year. Does that mean I will get the $7,000 tax credit on top of my refund(ex: $7,000 + $2000=$9,000)?
Also, will other tax credit affect the Tax Liability number?
that is correct - the refund has nothing to do with it - it's about the liability.
change you assumptions so there is no tax withholding during the year..... that doesn't change your liability but it does change how much a refund you are due.
The tax table amount would still be $7,000 in your example.. the EV rebate is the lower of this number or $7500. In otherwords, the liability can't go negative.
You would not be able to claim a Energy Efficient Vehicle tax credit on a 2020 tax return if the vehicle is purchased in 2021.
See this website for eligible vehicles - https://www.fueleconomy.gov/feg/taxevb.shtml
The tax credit is used to reduce your tax liability (tax owed). If the tax liability is reduced to 0 then the remaining credit is forfeited, it is not carried over to the next tax year. You cannot receive more of a tax refund using the credit only the amount of federal taxes withheld plus any other refundable tax credits you for which you are eligible.
Thanks for the confirmation that the Tax liability number is based on the figure in the tax table and not what is withheld on the paystubs. We'll leave our W4 withholding the same as one of us is part-time until economy recovers. To get the extra $500 to max $7,500 tax credit, I'll look to convert some IRA to ROTH.
This scenario will be for vehicle purchased before end of 2021 and claiming on next year's 2021 tax return. Wanted to run the numbers to maximize the vehicle tax credit, else, we'll buy an ICE vehicle if the federal vehicle tax credit won't help offset cost of higher priced comparable BEV.
Too bad there is no online calculator to estimate federal vehicle tax credits since it can't increase the federal refund amount.
I should be due a electric car $7500 tax credit for my 2020 taxes. So far, TurboTax says I will owe $1,400 in taxes (above the >$32,000 that I had withheld from my W2). Why does TurboTax state "We've calculated a credit of $0 for your plug-in electric motor vehicle"? Or do I have to wait until 2021 tax year? I don't get it!
So, the question is Do you qualify for the credit?
To qualify for the qualified plug-in electric drive motor vehicle tax credit your vehicle purchase must satisfy a number of criteria. First, only qualified vehicles you purchase after December 31, 2009 are eligible for the credit. Your plug-in electric vehicle must also be brand new, made by an eligible manufacturer under the Clean Air Act, have at least four wheels, be appropriate for driving on public streets and highways, and have a weight rating of less than 14,000 pounds. And most importantly, the vehicle must have an electric motor that uses a rechargeable battery to generate at least 4 kilowatt-hours of capacity. For details, click here: Electric motor credit
To enter or edit info in the program, here are the steps:
In TurboTax online,
- After sign into your account, select Pick up where you left off
- On the left menu, select Federal
- From the top, select Deductions and Credits
- Scroll down to "Cars and Other Things You Own", under "Energy-Efficient Vehicles", select Start or Edit
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