ST Alpha - "Current program is a tax credit. It maxes at $7,500 against owed taxes. If you owe less you don't get the extra in cash." (Reading a Post)

SlickerTalk
Search Archives
The Leaderboard
The FAQ

Down to Post

Backboards:

Posts: 151

In response to "Hey, you know those credits for electric cars? How do those manifest? That is... is it just a bottom line discount on the total price?" by Mop

Current program is a tax credit. It maxes at $7,500 against owed taxes. If you owe less you don't get the extra in cash.

Posted by TWuG Apr 12 '21, 10:28

The $7,500 phases out as manufacturers approach certain sales marks for the affected vehicles.

Tesla and GM are both done and their cars no longer qualify.

The new proposal would apply to all EVs (Tesla and GM included), but not sure if there would be a new phase out period. The new starting credit is $10,000, IIUC.

Responses:

Hmm... if I understand my tax credits (and I don't!), a $7500 tax credit does NOT equal $7500 in your pocket nor does it equal a $7500 discount on the car's price. Yes? No? Maybe? -- nm* - Mop Apr 12, 10:30 21
- It’s a non-refundable credit, so cannot exceed your tax liability for that year in combination with any other non-refundable credits. - znufrii Apr 12, 10:44
- appar I didn't understand this either. I can't believe you have to owe at EOY to get credit. I have no idea how I could structure my life - amanda jeans Apr 12, 10:32 19
  - It must be the difference between 'you had a tax liability' for the year, not balance due on that liability? -- nm - Max Apr 12, 10:38 4
    - everyone here is saying credit against what you owe, not against liability. if this is true, there's kind of no incentive because the vast majority of - amanda jeans Apr 12, 10:43 3
      - It’s a credit against liability just like any other credit. -- nm - spamlet Apr 12, 10:55
      - It helps wealthy people who owe taxes because they have taxable liability for things other than wages. Sales of stocks, property etc. It's not for - jnine Apr 12, 10:47
      - Everyone here is probably either mistaken or using ambiguous terminology. It’s a non-refundable credit, so cannot exceed your tax liability. -- (edited) - znufrii Apr 12, 10:45
  - I would think you need to plan ahead. Change your W-4 withholding for the year you plan to buy and reduce it by the credit amount? -- nm - decline Apr 12, 10:36 8
    - but I can't underwwithhold by $7500. I mean, my employer wouldn't let me. it's not physically possible. -- nm - amanda jeans Apr 12, 10:38 7
      - "For instance, if you bought an EV eligible for a $7500 tax credit and your total federal taxes for the year came to $8500, you would owe only $1000 - amanda jeans Apr 12, 10:41 6
        
        just claim ~ 15 dependents and you'll be all set -- nm - decline Apr 12, 10:46
        
        I think you found that at this link. Read down further - TWuG Apr 12, 10:44 4
        
        That’s poorly written. “What you owe in taxes” should mean your total tax liability, not what you owe when you file. -- nm - znufrii Apr 12, 10:48 3
        
        Yeah, that's how I read it. I think you have to manage your withholding. You just can't get it back if your total tax obligations (including - pmb Apr 12, 10:57 2
        
        It has nothing to do with withholding. -- nm - znufrii Apr 12, 10:59 1
        
        Right. -- nm - pmb Apr 12, 12:17
  - This is correct. If you don't owe taxes, no credit. -- nm - TWuG Apr 12, 10:34 4
    - so I would need to underpay my taxes all year (have my employer underwithhold)? this makes no sense at all. -- nm - amanda jeans Apr 12, 10:37 3
      - You're right. It doesn't. Say I have 10,000 withheld and don't owe anything April 15th, but you had 10,000 withholding and still owe 10000, you get th - zunk xometimes Apr 12, 10:47 1
        
        That’s now how it works. -- nm - znufrii Apr 12, 10:55
      - That's how the initial program was structured. It's an incentive, but not the best incentive. The new program may be different - TWuG Apr 12, 10:40
if you owe less or if your liability is less? -- nm - amanda jeans Apr 12, 10:29

Post a message top

Current program is a tax credit. It maxes at $7,500 against owed taxes. If you owe less you don't get the extra in cash.

Replies are disabled on threads older than 7 days.