If I purchase an electric vehicle with the 7500 tax credit, how do I ensure that I will owe enough at the end of the year to see that full credit when I do my taxes?

[Texas Roger]

It all depends on what credits your kids qualify you for. If they are all under the age of 17 at year end of the tax year, they each would qualify for $2000 of child tax credit which would be subtracted from your tax liability before the EV credit is applied. So you would need $13,500 of tax liability before credits. Your AGI for MFJ using the standard deduction would need to be $122,277 to have enough tax liability after the $6000 of child tax credits to leave $7500 of tax liability to offset the EV credit.

[SweetieJean]

Right. Tax Credits are issued in a priority order.  And all of this assumes that there are no further tax law changes for 2019.

[Boulin99]

This is my favorite string I've read in a month.

I've a slightly different question:. Can you qualify for multiple credits?  or, if you buy two qualifying vehicles, do you get a 15k credit?

Would three give you 22.5?

Also, if you are married filing jointly and one spouse has no income, would their credit count towards joint liability?

[KONA EV]

I purchased a 2019 Kona ev in December 2019. I had no claimed income in 2019. The dealer told me I would still get the money even if I didn't owe any taxes. I know dealer never lie LOL Can anyone tell me what I  can do? I'm hoping maybe I can carry it over this year, if I can't use it now.

[BillM223]

No, unfortunately, the IRS says, "If you cannot use part of the personal portion of the credit because of the tax liability limit, the unused credit is lost." See the Instructions for Form 8936, line 23.

Unless you discover some income that you didn't claim for 2019 and file or amend your return to claim the unreported income, there is nothing you can do.

Not all credits can be carried over. 

[Texconsin]

Re:  converting IRA to Roth to generate a tax liability....that's exactly what I'm going to do when I trade my SECOND Volt (bought 2 weeks before the full credit was cut in half) on a Kia Niro.  I figure that, unless the law changes, Kia should have the full credit for another couple of years, at least.

[Usaking75]

I received a voucher in one of  California's air quality program for $9500 to purchase EV or Plug in hybrid . I will get a tax form at the end of the year .. as far as I understand , if I used this voucher it will be counted as income in 2020. 

Want to know based on that , how much my family need to make in 2020 to qualify for whole $7500 tax credit ( thinking of new rav4 prime ) .. MFJ with 2 kids under 17.

Thank you 

[Texconsin]

It's based on tax liability and vehicle, not on income.  For instance, if your tax liability after other credits (not what you owe after withholdings and payments) is $6,000, that's your limit, if the vehicle is qualified...which Tesla is no longer.  If you bought a Chevy Bolt in the first quarter, your limit is $1,875 and it no longer qualifies at all after that.  I know, because I got $7,500 on a new 2014 Chevy Volt on my 2016 return and I'll get $7,500 on a new 2018 Chevy Volt on my 2019 return, as I purchased it in Q1 2019 when the credit for GM was still the full amount.

[Texconsin]

I was just about to reply to myself to tell myself that was my plan, too!  After my stocks tanked last month, I rolled some devalued shares - enough to use my itemized deductions and stay in the lowest bracket - so maybe I'll roll some cash next year...still haven't driven the Volt.

[Texconsin]

No wonder the state is going broke.

[MasterC]

Summary:  I think the EV tax credit actually applies before the child tax credit.  A portion of the child tax credit IS refundable beyond the total tax liability.  Am I wrong?

Regarding combining the EV credit with the child tax credit, I keep seeing essentially this advice here:  "...they [children] each would qualify for $2000 of child tax credit which would be subtracted from your tax liability before the EV credit is applied. "

I'm not sure that's correct.  Looking at Form 8936, you put the EV credit in line 19 (e.g. $7500).  Then in line 20 you put the tax amount from 1040 line 12b -- this is the tax BEFORE deducting the child tax credit.  From that, you subtract the "personal credits" (entered in line 21 of 8936).  Referring to form 8396 instructions for line 21, these personal credits consist of: 

"the total, if any, credits from Schedule 3 (Form 1040
or 1040-SR), lines 1 through 4 (or Form 1040-NR, lines 46 through 48); Form 5695, line 30; Form 8910, line 15; and Schedule R, line 22." 

None of that is the child tax credits.

Based on this, it seems to me the advice previously given in this thread is not correct.  For example, say my tax liability (1040 line 12b) was $10,000.  I think I could subtract the $7,500 EV credit, leaving $2500 of liability.  If I had 4 kids, the full child tax credit would be $2,000 * 4 = $8,000.  However, since this is more than my remaining tax liability (after the EV credit), I have to look at the REFUNDABLE amount of the child tax credit, which is $1400 each.  In this case $1400 * 4 = $5600, so I could apply it to reduce my tax liability by up to $5600 BELOW zero. 

Am I interpreting something wrong here?  Thanks!

[Critter13]

Which line on my return shows my liability?

I am confused on whether or not the “liability” is before/after deductions and if so which deductions. knowing the specific line on my return would answer that. Thanks. 

[IA11]

If I am not able to use, full $ 7500 electric vehicle credit this year due to lower taxable income; can I use remaining credit next year. 

[Texconsin]

No.  It must be used in the year of purchase and only to the extent you have a tax liability to offset.  It is not a refundable credit, however you can create a refund of tax withheld and/or estimates paid.  One way to generate a tax liability is to sell some stocks at a gain or roll all or part of a regular IRA into a Roth.

[Anonymous]

also the basis of the vehicle is reduced by the credit.

and most taxpayers don't realize there can be recapture of the credit pursuant to reg 1.30-1