Electric Vehicle Tax Credit

[lucas709]

Let's say we overpaid on taxes in 2019 (paid $1000 but owed $6000) so we would be eligible for a $4000 refund. And if I qualify for the $3750 tax credit for purchasing a new EV would my refund then be $4000 + $3750 = $7750 total? Thanks!

[JulieS]

Your figures don't add up, but what I think you are asking is, will your EV Motor Vehicle Credit (Form 8936) increase your refund dollar for dollar?

The answer to that is, it depends.

This a nonrefundable credit. That means if your  tax liability is $1000 and you get a a Form 8936 credit for $3750, that will reduce your taxes to $0. In that case you would get a refund of the amount of tax that was withheld. 

In other words, your tax liability would have to be at least $3750 to get the full benefit of this credit. 

[SD_]

If I paid 11,000 in income taxes, but have a 7500 tax credit once the electric vehicle form is available and turbo tax is saying my refund will be $2500, will my rebate increase?

I guess I don’t fully understand the difference between what I paid in taxes, my rebate amount, my tax liability, and how a tax credit affects any of those things. 

[GiseleD · Accepted solution]

I cannot specifically advise how this tax credit will affect your refund without actually seeing your return and all the supporting tax forms. There are many other factors that affect the size of your refund other than your withholding and this credit. However, I've included some information about this credit below to shed some light on how it is calculated:

Electric Vehicle Credit—Tesla

IRC section 30D provides for a credit for certain new qualified plug-in electric drive motor vehicles. The base amount of the credit is $2,500. The credit is increased by $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours, limited to $5,000. Thus, the maximum credit for the purchase of a new electric powered vehicle is $7,500.

The credit begins to phase out in the second calendar quarter after the calendar quarter in which at least 200,000 of a manufacturer’s vehicles that qualify for the credit have been sold. Taxpayers purchasing the manufacturer’s vehicles during the first two calendar quarters of the phase-out period may claim 50% of the credit, and 25% of the credit during the third and fourth calendar quarter. After the last day of the fourth calendar quarter of the phase-out period, the credit is zero. The IRS issues a Notice when a particular make and model of an electric vehicle reaches 200,000 in total sales and thus begins to be subject to the phase-out period.

The IRS has announced that Tesla, Inc. has cumulative sales of qualified electric vehicles that have reached the 200,000 limit during the calendar quarter ending September 30, 2018. Accordingly, Tesla electric vehicles sold after January 1, 2019, are subject to the credit phase-out. 

Electric Vehicle Credit—GM

IRC section 30D provides for a credit for certain new qualified plug-in electric drive motor vehicles. The vehicle must be a new vehicle that is purchased for use or lease in the United States. The base amount of the credit is $2,500. The credit is increased by $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours, limited to $5,000. Thus, the maximum credit for the purchase or lease of a new electric powered vehicle is $7,500.

The credit begins to phase out in the second calendar quarter after the calendar quarter in which at least 200,000 of a manufacturer’s vehicles that qualify for the credit have been sold. Taxpayers purchasing the manufacturer’s vehicles during the first two calendar quarters of the phase-out period may claim 50% of the credit, and 25% of the credit during the third and fourth calendar quarter. After the last day of the fourth calendar quarter of the phase-out period, the credit is zero. The IRS issues a Notice when a particular make and model of an electric vehicle reaches 200,000 in total sales and thus begins to be subject to the phase-out period.

The IRS has announced that General Motors, LLC, (GM) has cumulative sales of qualified electric vehicles that have reached the 200,000 limit during the calendar quarter ending December 31, 2018. Accordingly, GM electric vehicles sold after April 1, 2019, are subject to the credit phase-out. 

@SD_

[annes1]

Hi, I echo this question as well. If I've paid >$15,000 in taxes over the course of the year, but don't owe anything during tax season and in fact get a refund, do I still get $7,500 for my new EV? 

Have you been able to figure out an answer to this question?

[Critter-3]

The EV credit can ONLY negate federal taxes on your return ... not any SE taxes or penalties.  Anything not used to negate fed taxes is lost  so some good tax planning is required... it is no a refundable credit.    Look at the form 1040 to see how the credit can help you ...