Electric Car Rebates

[Jack Nathan]

I bought an electric this year in California.

what is the income that I need to have to qualify for the federal and state rebates?  I am retired and don’t have much income. What types of income are counted?

[TeriH]

Great question and congrats on retirement,

The credit ranges from $2,500, to $7,500, depending on battery capacity and manufacturer caps.  Since the credits are non-refundable, you will need taxable income. 

A nonrefundable tax credit means you get a refund only up to the amount you owe. For example, if you are eligible to take an EV credit worth $2,500 and the amount of tax owed is only $1,000, you can only reduce your taxable amount by $1,000 – not the full $2,500. Examples of Refundable Tax Credits.

If you cannot use part of the personal portion of the credit because of the tax liability limit, the unused credit is lost. The unused personal portion of the credit cannot be carried back or forward to other tax years.

Best wishes and enjoy the new car.

teri

[KochuK]

Hi Jack, thank you for posting the question.

Congrats on purchasing an EV in California this year. 

FYI, EV credit can be used to offset your tax liability to zero. It does not limit what type of income and deductions that generates the tax liability.

You indicated that you are retired and don't have much income, hence I assume you do not have much tax liability. 

Quote

If you cannot use part of the personal portion of the credit
because of the tax liability limit, the unused credit is lost.
The unused personal portion of the credit cannot be
carried back or forward to other tax years.

Unquote

Page 3 of Form 8936 (this form is used to claim the EV credit).

https://www.irs.gov/pub/irs-prior/i8936--2022.pdf 

While there still is time in tax year 2023, you might consider bringing some income (all types of income) to generate tax liability to utilize the EV credit.

Hope this helps.

Thank you,

Kitty

[VolvoGirl]

Your income just has to be under the max, there is no minimum income.  But you must have a tax liability on your 1040 line 22.  It's not whether you get a refund or a tax due. And the withholding doesn't matter. It's if you have a tax liability on your income. Look at your 1040 line 22 for total tax. So as long as Line 22 is more than $7500 (before applying the credit), you'll get the whole credit back.

Basically you can only reduce the TAX on line 22 to ZERO. Then you just get back all your withholding, not any more.  So you might want to increase your income so you can use all of the credit.   Like convert a traditional IRA to a ROTH IRA or sell some stocks with a gain.

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

[HasaniJ]

Hey Jack,

Below is a link to California's eligibility and requirements including income for the credit.  As my fellow tax expert said, you would receive a tax credit that offsets any taxes you may owe when you file your 2023 tax return.  Whatever credit that's not used gets carried over to the next year.   

https://cleanvehiclerebate.org/en/eligibility-guidelines

[Lilbean20]

Hi, I also purchased an electric vehicle with the expectation that I will receive up to +-$7,500 in federal rebates when I file my taxes. However, I have already made 2 quarterly payments to the IRS for my 2023 taxes. Will that potentially limit the amount of rebates I am eligible for, or can I carry forward my 'prepaid taxes' to next year? 

Thanks in advance, 

Marie 

[Jack Nathan]

Teri and others:

Thank you for your guidance.

Two questions on timing of the conversion of Traditional IRA to ROTH IRA :

1. The full amount of the conversion is counted as income?  If I convert $25,000 , all of that is considered taxable income?

2. The timing of the conversion and the amount can wait till April 15, 2024 so that I can convert the exact amount required required to enable me to secure the EV refunds?

Thank you !

[VolvoGirl]

@Lilbean20   Answered in your other post here,

https://ttlc.intuit.com/community/file-with-turbotax/discussion/quarterly-filing-federal-rebates/00/...