I have a question about ev credit for 2023. If my tax liability line 24 is over 20k and I file jointly with spouse do I qualify for the ev credit

[ifeelsooblue]

What I get confused about is the amount withheld already from our paychecks.  Usually what's withheld already from w2 is around 19k which means at the end of the year I owe around 1k.  Does this mean I can only get 1k of the $7,500  and lose out on $6,500 or I am looking to get 6,500 back because I already paid 19k in taxes ?? Please help

[Mike9241]

there are many rules that have to be met to qualify for the credit. see the following iRS link:

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

say you qualify and your tax liability before the credit is $20.0K. if you qualify for the full $7.5k credit your tax liability will be reduced to $12.5K with $19.0K in withholding you will get a refund of $6.5K. 

don't know what makes up your taxes but basically the taxes that can be offset are the taxes on 1040 line 18 less certain personal credits per the Form 8936.  Additional taxes on schedule 3 cannot be offset   for example, self-employment tax. 

so if you had $6K in regular income taxes and $14K in self-employment taxes only $6K of the credit could be used the rest would be lost. 

[NCperson]

yes, it does get confusing.  

The credit has NOTHING to do with your withholding.

Take a look at the Form 1040. (the 2023 form is going to be almost exactly the same)

https://www.irs.gov/pub/irs-pdf/f1040.pdf

the EV credit reduces your tax liability - that is line 22.  That means that to take full advantage of the $7500 tax credit, Line 22 must be at least $7500 BEFORE applying the credit.  Look at your 2022 tax return to see that, 

Your withholding and any estimated payments are applied beginning on Line 25 so have no impact on the tax credit.  This is where folks get confused.  They think that line 34 has to be at least $7500 to get the credit, Not True. 

Line 22 is what you owe (your "tax liability"); Lines 25-34 is how you pay what you owe.  

See the difference? 

ps if it plays out like 2022, you are getting $6500 back