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Is the $7,500 Federal tax credit for electric cars before AGI or after ?

Discussion in 'TSLA Investor Discussions' started by AprilDelivery??, Sep 23, 2013.

  1. AprilDelivery??

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    Is the $7,500 federal tax credit for electric cars before AGI or after? Im sorry but i didn't see it on this forum.
     
  2. sleepyhead

    sleepyhead Active Member

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    It's a tax credit and not a deduction. It is deducted from your tax liability and it is non-refundable (meaning you have to owe at least $7,500 in taxes to get full benefit).
     
  3. Zythryn

    Zythryn MS 70D, MX 90D

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    It is not affected by AGI.
     
  4. AprilDelivery??

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    So after you deduct your standard deduction or itemized deductions you deduct the $7,500 federal tax credit?
     
  5. Zythryn

    Zythryn MS 70D, MX 90D

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    I am not a tax accountant. But the 7500 is deducted from the amount you owe.
    I would check with an accountant, tax software, or the IRS for details.
     
  6. Objective1

    Objective1 Member

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    A tax credit is deducted from tax owed after you have calculated the tax owed on your (adjusted) income. It's not an income deduction.
     
  7. sleepyhead

    sleepyhead Active Member

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    If you make $100k and owe $10k in taxes, then you can deduct the credit of $7,500 and you will only owe $2,500 in taxes. If you had $10k withheld from your paychecks then you will get a $7,500 refund.

    If you made $100k and owe only $5k in taxes, then you will not be able to take the full advantage of the credit, because it is non-refundable. You can only deduct $5,000 from your TAX LIABILITY (aka taxes owed) and your tax liability becomes $0. So you would get a tax refund for all of the tax that was withheld from your paychecks. In this scenario you are leaving $2,500 on the table, since you weren't able to take advantage of the full $7,500 tax credit.
     
  8. AprilDelivery??

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    Thanks. Your the best!
     

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