Claiming EV Tax Credit Questions

[seane04]

I recently purchased (June 2023) a new 2023 Tesla Model Y.  How do I make sure I can claim the full $7,500 tax credit?

Some information about my income and taxes:

-I am married and file taxes jointly.

-We have a combined gross income of about $190,000.

-When we file taxes, we typically receive a federal refund.  For 2022, we received $1,249 back.  For 2021, we received $3,756 back.

Some additional questions:

1. I don’t quite understand tax liability.  We pay more than $7,500 in federal taxes.  Just my federal tax withheld on my paychecks is around $1,534.49 per month.

1. Will I receive the tax credit of $7,500 on the sole basis that my federal tax withheld is more than $7,500 per year?  Does this come as a refund?  Or, do I need to make sure I have additional federal taxes due of at least $7,500 when I file for the 2023 tax year by withholding federal taxes between now and the end of 2023?

1. If I do need to have at least $7,500 of additional federal taxes due when I file for the 2023 tax year… In order to claim the $7,500 tax credit, do I need to adjust my taxes withheld by filling out a W-4 Employee’s Withholding Certificate form?  If so, how do I fill this out correctly so I can claim the $7,500 tax credit?

1. Is there any additional information I should know or consider?

The ev tax law changes and ev tax credit incentive is very confusing for me to understand.  If you can break it down to its simplest form for me to understand, that would be greatly appreciated.

Thank you so much! 🙂

[jlschn]

purchased 2023 chevy bolt  in Dec.2022.Can I take a credit for It in 2023?

[Donna F 77]

Congratulations on the purchase of your new Tesla!  Please keep in mind that we can only provide advice on current law.  The laws may change before you actually file your 2023 tax return.  According to the Inflation Reduction Act of 2022, you are eligible for the credit based on your income of $190k and a Married Filing Jointly filing status.  Your tax liability is the actual amount of tax that you owe based on your taxable income.  You can find it on a copy of your tax return from last year.  This credit will reduce the full tax liability before taking into account your withholding from your paychecks.  If you generally receive a refund, then it is very likely that you would receive a refund with the clean vehicle credit.  For example, if your tax liability is $20k, it would be reduced by the $7,500, then your withholdings would be applied to the remainder of the liability to calculate your refund amount.  This credit is part of your tax return so the refund would be included in your tax refund from your tax return.  There would be no need to reduce your withholdings at this point.

Here are the details relating to qualified vehicles:

https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after

Here is another source of information from TurboTax as well:

https://turbotax.intuit.com/tax-tips/going-green/understanding-the-new-clean-vehicle-credit/L6Y0JrGN...

[seane04]

Donna, thank you so much for your response.  Am I understanding correctly...?

-If my total tax liability (line 24 on tax return) is greater than $7,500, then I will receive the full $7,500 tax credit in the form of a tax refund?

-My total tax liability (line 24) for 2022 was over $24,000.  We haven't changed anything to our withholdings, so we anticipate that will be somewhere around the same amount.

With that information, I do not need to file for additional withholdings, correct?

Please let me know if I understand correctly.

Thank you @Donna F 77 

[Donna F 77]

In this specific instance, your tax liability would be reduced by the $7,500 credit.  If the liability was $24,000, it would be reduced by $7,500 down to $16,500.  You would then subtract the amount of tax withholding you had for the year to get the actual result of refund/balance on your tax return.  The $7,500 would not be a separate refund.  It will only reduce your tax liability so it very well may result in a refund.

[norishep]

I need to claim mine