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How to make the $1875 work for me?
- Thread starter ozziegn
- Start date
It’s NOT a refundable credit, so if you don’t owe $1875 or more, then you won’t see all of it.
Say you owe $1875 and get paid one a month and have $156.25 withheld from your paycheck. Come April when you file your taxes you would get a check back for $1875.
Say you only owe $1000, get paid once a month, and have $83.33 withheld from each paycheck. Then in April you would get a refund check back for $1000 and the remaining $875 disappears.
Say you owe $1875 and get paid one a month and have $156.25 withheld from your paycheck. Come April when you file your taxes you would get a check back for $1875.
Say you only owe $1000, get paid once a month, and have $83.33 withheld from each paycheck. Then in April you would get a refund check back for $1000 and the remaining $875 disappears.
How much do you owe though? You could just be really overpaying (via paycheck withholding) OR you could have enough deductions and stuff that you don’t actually owe anything. That’s an important distinction on if this tax credit will do anything for you.
(Also, adjust your withholding so you’re not giving the government such a big loan for free. You should be as close to owing zero and getting a zero refund as possible. I’ve been able to almost nail the last couple years with like a $37 refund one year and owing like $11 the next...)
if u are getting a refund than this won’t help ., you want to adjust your withholding so at end of year you have a liability of at least 1875 ....this is not a refund
That’s incorrect. If he has at least $1875 in federal income tax liability for 2019, he will earn the full credit. If he would get a tax refund without the credit as he typically does the refund will be increased by $1875, as long as his total federal income tax for 2019 is at least $1875.
If he is getting refund he over withheld ..this is a credit not refund ..
The short answer is yes, as long as you have at least $1875 in federal income tax liability.
Your refund will increase by $1875 if you already were entitled to a refund. More info is here: https://cars.usnews.com/cars-trucks/how-does-the-electric-car-tax-credit-work
Whether he would get a refund or owe the IRS at the end of the year is not relevant — all that is needed to claim the full credit is to have $1875 in federal income tax liability for 2019.
We have a few CPAs on TMC including @cpa — perhaps they can weigh in.
you just answered what I have been saying ..if you are getting a refund you have no liability
No, it just means you don't owe anything on April 15th above what you've already paid in. If my IRS tax amounted to $10,000 and my employer withheld $11,900 then I'm due a refund of $1900. If I bought a Tesla this year and my IRS tax and employer withholding remained the same then my refund is $11,900 - ($10,000 - $1875).
The basic equation for the refund the OP will get next April is:
refund = amount_withheld - max( irs_tax - 1875, 0 )
The OP needs to look on his tax form to see how much his total IRS tax was last year (forget about refunds, etc).
Sir Guacamolaf
The good kind of fat
There seems to be a lot of misinformation on this thread.
This link may help clear it up Solved: If I purchase an electric vehicle with the 7500 tax credit, how do I ensure that I will owe enough at the end of the year to see that full credit when I do my taxes?
This link may help clear it up Solved: If I purchase an electric vehicle with the 7500 tax credit, how do I ensure that I will owe enough at the end of the year to see that full credit when I do my taxes?
Lol. This thread is a great example how something really simple can blow up into a complicated discussion. Next up: Do I turn the clock an hour forward or back for DST and will I lose or gain time???
You can get a refund and still have a tax liability. Your tax liability is the amount of taxes that you are required to pay each year. The refund you get is the positive difference between your tax liability and what you've paid through withholdings.
Changing your withholdings changes your refund, it does not change your liability.
The EV tax credit applies against your liability. Whether or not you get a refund has no bearing on whether you can benefit from the tax credit.
If anyone's still not sure - look at your tax forms from the previous year (assuming your financial situation hasn't changed much this year) - if you're using form 1040 check out line 15 (as of year 2018). That is your total annual tax liability. If it's greater than or equal to the tax credit then you will get the full benefit. If it's less than the tax credit then you'll get whatever that amount is.
I should also point out that line 16 is the taxes already withheld (that you paid). If that amount is less than line 15, then you owe taxes. If it's more than line 15, then you get a refund.
Assuming your financial situation is the same for the year you're getting the EV credit, if you owe money, the tax credit applies against that, so if you owed 1875 and are getting the 1875 EV credit, you're free and clear. If you don't owe anything, and the IRS doesn't owe you anything, you get 1875. If the IRS owes you a refund, you get that as well as the 1875. Again, assuming your total annual tax liability is at least 1875.
You go through the process to calculate he taxes you owe. Then you look to see how much you paid. If you paid too much, you get refund. If you didn't pay enough, you have to pay more taxes.
The credit decreases the amount of tax owed.
Taxes calculated - tax credit. The you figure out if you paid too much or too little.
There is no carryover and tax owed cannot be less than 0
The credit decreases the amount of tax owed.
Taxes calculated - tax credit. The you figure out if you paid too much or too little.
There is no carryover and tax owed cannot be less than 0
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