ST Alpha - "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*" (Reading a Post)

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In response to "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." by TWuG

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*

Posted by Mop (aka rburriel) Apr 12 '21, 10:30

(No message)

Responses:

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

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