I agree with
@Ray_R . The tax credits has nothing to do with the tax withheld on your paycheck (this is the taxes you prepaid against the "estimated taxes owed").
Taxes owed = tax liabilities on your taxable income.
Non-refundable tax credits example:
#1 If you make $150k/year, after all non-taxable deducdtions (401k, FSA, etc) your taxable income is $100k. That leads to 8.5K tax liabilities (or taxes owed) to the IRS. You had your company withheld $6.5K from your paychecks. Then you will need to cut $2k check to the IRS with your tax return. If you are claiming $7.5K EV credits, you will get a $5.5K (6.5K+($
7.5K-$8.5K)) refund instead. You get full
$7.5K credits because your tax liabilities (or tax owed) is $8.5K.
#2 Same as above, if your tax liabilities are $4.5K, you will get $6.5K refund ($6.5K + (
$4.5K-$4.5K)), the EV credits are reduced to $4.5K which is the amount you owed. The
$6.5K was
your own money that was withheld on your paychecks.
Refundable tax credits example:
#3 Same as #2 above,
IF this is refundable EV credits, you will get $9.5K refund ($6.5K + (
$7.5K-$4.5K)), you will still get full $7.5K credits even you owe less than $7.5K.
@thetuk Are you sure to be able to claim the $7.5K credits next year? If so, you can reduce your withholing by updating your W-4. That way, you can get the refund sooner and not in the middle of next year.