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lewisde-purdue
New Member

Would I get eligible for the the Plug in Electric car tax credit

I am considering buying an electric car and the $7500 tax credit is a big draw, but I usually get money back on taxes anyway, so would I be eligible for this credit?
1 Best answer

Accepted Solutions
TaxGuyBill
Level 9

Would I get eligible for the the Plug in Electric car tax credit

It is based on the total amount of income tax on the tax return, not the amount that you owe.  It is best explained by example:

Let's say your 'usual' tax return shows $10,000 in income tax, and you had $12,000 of Federal income tax withheld from your paychecks.  That would result in a refund of $2000.

Now let's add the vehicle credit.  The $7500 offsets the $10,000, so now there is only $2500 of tax.  You still had $12,000 of Federal income tax withheld from your pay, so now it results in a refund of $9500.

However, any unused amount does not carry over.  So if your total income tax (Line 47 of your Form 1040) is less than $7500, part of the credit would be lost.

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1 Reply
TaxGuyBill
Level 9

Would I get eligible for the the Plug in Electric car tax credit

It is based on the total amount of income tax on the tax return, not the amount that you owe.  It is best explained by example:

Let's say your 'usual' tax return shows $10,000 in income tax, and you had $12,000 of Federal income tax withheld from your paychecks.  That would result in a refund of $2000.

Now let's add the vehicle credit.  The $7500 offsets the $10,000, so now there is only $2500 of tax.  You still had $12,000 of Federal income tax withheld from your pay, so now it results in a refund of $9500.

However, any unused amount does not carry over.  So if your total income tax (Line 47 of your Form 1040) is less than $7500, part of the credit would be lost.

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