Question about the $7500 tax credit...

[Gizmotoy]

A few years ago, I had a negative tax bill (i.e., a refund for more than I paid in taxes) because of multiple kids in college and the education tax credits. Is this credit different in that it's capped at your tax liability?

Probably. There's an important distinction. Did you actually have a negative tax bill, or did you overpay your taxes during the year such that you got a refund? For example, you withheld $20k but your total tax bill came out to $15k, so you got money back.

If you actually owed no tax (or had negative, if that's possible... carryover from previous year, maybe?), the credit is worthless. If the tax you owe is greater than $0 and less than $7500, you get whatever you owed back. If you owe more than $7500, you get the full amount. If that results in you getting a refund for overpayment, you'll get a refund.

 

[Barry]

Probably. There's an important distinction. Did you actually have a negative tax bill, or did you overpay your taxes during the year such that you got a refund? For example, you withheld $20k but your total tax bill came out to $15k, so you got money back.

If you actually owed no tax (or had negative, if that's possible... carryover from previous year, maybe?), the credit is worthless. If the tax you owe is greater than $0 and less than $7500, you get whatever you owed back. If you owe more than $7500, you get the full amount. If that results in you getting a refund for overpayment, you'll get a refund.

The year in question I really had a negative tax bill - Uncle Sam paid me! No carryover, other than the $3000 capital loss deduction.

I can always generate taxable income with capital gains, if necessary, to maximize the credit.

 

[Jace_91]

The year in question I really had a negative tax bill - Uncle Sam paid me! No carryover, other than the $3000 capital loss deduction.

I can always generate taxable income with capital gains, if necessary, to maximize the credit.

For simplicity of numbers a single man with no kids that makes $50k owes about $6000 without any other credits. Any other credits you may qualify apply before the EV credit. but regardless, if you only owe $6000 at the end of the year then you will get a credit for $6000 and owe $0. You will not get $1500 back as the EV credit will only reduce your bill to $0.

 

[Seven7]

Thanks for your help everyone! I'll call my accountant on Monday and he will probably call the IRS to make sure. My next ModelS will be a 2014. :smile:

 

[texex91]

Thanks for your help everyone! I'll call my accountant on Monday and he will probably call the IRS to make sure. My next ModelS will be a 2014. :smile:

Good call on all fronts

P+ perhaps in 2014....

 

[neroden]

Obviously consult your CPA.

However, I was told you can file the $7500 credit even if you owned it for a day, as long as it was titled in your name.

It's technically a matter of intention. You have to have intended to keep it. But if you change your mind after the first day, well, you intended to keep it!

- - - Updated - - -

The year in question I really had a negative tax bill - Uncle Sam paid me! No carryover, other than the $3000 capital loss deduction.

I can always generate taxable income with capital gains, if necessary, to maximize the credit.

I had to do that in order to use the credit.

 

[damianku]

Everything I have heard lists the $7500 number but form 8936 for 2013 lists $2500 as the max.

Am I looking at something wrong?

 

[Lloyd]

Everything I have heard lists the $7500 number but form 8936 for 2013 lists $2500 as the max.

Am I looking at something wrong?

The form states that is for TWO WHEELED VEHICLES!

 

[damianku]

Line 17 in section III of the personal section lists the $2500 max.
Line 18 mentions 2 wheels

 

[Lloyd]

Tentative credit is carried forward from Line 4 as $7500, Line 15 says: If you skipped Part II, enter the amount from line 4. If you completed Part II, subtract line 6 from line 4. If the vehicle has at least four wheels, leave lines 16 and 17 blank and enter this amount on line 18

So... 17 stays blank and the 7500 is carried to line 23.

 

[ACDriveMotor]

Guys, TurboTax!