Federal Tax Credit: Where To Look?

[candyfordays]

Hey guys,

Quick question, which section should I focus on to see if I could take advantage of the full tax credit?

 

[Kevy Baby]

Do a site search - there are already a number of discussions about this such as this one.

 

[VQTRVA]

Hey guys,

Quick question, which section should I focus on to see if I could take advantage of the full tax credit?

Try looking in the Non Refundable Credit section:

TaxAct - Your biggest refund, guaranteed.

of note on the Tax Credit is that if you bought a Tesla >= July 1st - it is a $1875 credit.
And it only negates the tax portion that you owe (liability) .
Ex: If you owe $1500 to the IRS - the tax will only take that $1500 down to $0. It won't give you a refund of $375.

Your tax liability before you pay the IRS even one penny? THAT's the amount that will be reduced by $1875.

If your tax owed is zero you would not receive the credit at all, even though you are otherwise eligible for it.

 

[Snow Drift]

1040 Line 11 - Tax.

Did you pay Federal Taxes more than Credit $ OR do you owe unpaid Federal Taxes more than Credit $?

Basically, if you have a decent job, you probably qualify.

 

[candyfordays]

1040 Line 11 - Tax.

Did you pay Federal Taxes more than Credit $ OR do you owe unpaid Federal Taxes more than Credit $?

Basically, if you have a decent job, you probably qualify.

Ah thats the easiest answer. Got it. Thank you!
From my research, with hypothetical numbers, if I have $8000 on Line 11 and every year I get a refund of $3000. It should be as easy as just doing $3000+1875?

 

[Snow Drift]

Ah thats the easiest answer. Got it. Thank you!
From my research, with hypothetical numbers, if I have $8000 on Line 11 and every year I get a refund of $3000. It should be as easy as just doing $3000+1875?

Your eligibility for the credit is unrelated to your refund for overpayment of taxes. Just take your Federal Tax liability, (line 11), subtract any Personal Credits, and which ever is smaller you get as a credit (EV Credit or EV Credit minus Personal). If you already paid Fed taxes, you get them back, if you owe, it offsets some or all of your liability due.

If you just mean your check from the IRS will be $3k+1875, then that's possible.

 

[VQTRVA]

Ah thats the easiest answer. Got it. Thank you!
From my research, with hypothetical numbers, if I have $8000 on Line 11 and every year I get a refund of $3000. It should be as easy as just doing $3000+1875?

If you owe more than $1875 in taxes (what you have paid is immaterial) you get $1875 off your federal taxes.
If your total tax bill after deductions is less than $1875 you will not get the full $1875 only the total amount of Tax you were meant to pay.

It's the total amount of tax you would owe that year that matters.
So if you get the car in 2019 your tax bill needs to be greater than $1875 that year.

Now what confuses people is how people interpret the word OWE.
Many (most?) people will think that OWE means how big a check they still must write in April, & that has nothing to do with whether you get the tax credit or not.

What matters is your tax LIABILITY (aka OWE) for the whole year.
That's the total amount that the federal gov't wants to collect from you (and your payroll withholdings) for the entire year. This liability is the amount that will be offset by the $1875 EV tax credit, and may result in getting you a bigger refund check or at least reducing the size of the check you must write in April.

Hope this help.

 

[Gondi63]

If you already paid Fed taxes, you get them back, if you owe, it offsets some or all of your liability due.

So many people seem confused by this, thinking they need to owe at the end of the year in order to qualify.