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EV tax credit filing status

Hi I’m looking to buy an EV and take full advantage $7,500 tax credit. However due to my income of $54,464 and my filing status as head of household, my total tax due (line 24 of tax return) is only around two thousand dollars. I would like to know if it would be prudent to change my filing status to single in order to increase my tax due and therefore be able to reap more of $7,500 EV tax credit.

1 Reply
KochuK
Employee Tax Expert

EV tax credit filing status

Hi Ysigonzalez, thanks for joining the forum today.

 

You are knowledgeable about how to best use the EV credit for qualified cars purchased in tax year 2023.

 

EV credit can be used to offset the tax liability on Form 1040, line 22 tax liability ( before Schedule 2 Additional taxes) to zero with unused credit lost and cannot be carried forwards.

 

You can use IRS Interactive Tax Assistant tool to find the filing status that will result in the lowest amount of tax.

https://www.irs.gov/newsroom/theres-more-to-determining-filing-status-than-being-married-or-single 

 

Or, if you can wait until tax year 2024 to purchase your new EV - 

Quote

Starting in 2024, the Inflation Reduction Act establishes a mechanism that will
allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the
purchase price.

Unquote

https://home.treasury.gov/system/files/136/EV-Tax-Credit-FAQs.pdf 

 

However, under recapture rules, if the credit is transferred to the dealer, and the taxpayer's Adjusted Gross Income exceeds the limitation amounts, the taxpayer must pay back the benefit he or she received from the dealer by increasing his or her tax liability accordingly.

 

Please see income limits per below links.

Credits for New Clean Vehicles Purchased in 2023 or After

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

 

Hope this helps. Thank you.

Kochu Kitty

 

 

 

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