Hi,
I understand you changed your W-4 withholding to lower your federal tax withholding to zero in anticipation of the electric vehicle credit and you want to know if you will get penalized for under withholding. The answer is "maybe." The IRS requires you pay your taxes basically as you earn your income. Jobs are really great at getting this right if nothing unusual happens (like a second job, a big credit or a self-employment gig that isn't figured into the employers withholding).
What the IRS cares about is whether you paid in enough taxes as the right time. Since it's complicated, they provide a safe harbor where you won't get penalized if you meet one of these three criteria:
There is more detail in this TurboTax article. Take a peek. If you are worried, this article also tells you how to make estimated tax payments.
Please cheer if you find this article helpful!
The amount is the amount of the credit, up to $7,500 can reduce your income taxes to zero. Look at your withholding year to date and add the 7,500 amount to that. Compare the result to your estimated 2022 total income taxes. If the withholding plus the credit amount are over your estimated 2022 taxes, you can safely continue no withholding until 12/31/2022. If it is not sufficient to cover your total income tax for 2022, complete another W-4 with your employer to start withholding again until the end of 2022. You can also make estimated payments for 2022.
To estimate your 2022 taxes, use this link https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
The Turbo Taxcaster, Tax Calculator 2022 will help you do your estimated taxes.