Slightly OT: M3 EV Tax Credit + Solar Credit

[scottman71]

Sorry for the slightly OT question, but maybe it'll affect a few others in the same boat.

After getting my M3, I decided to get more off the grid and look into installing solar. I am reading that the IRS applies the rebate for solar energy installation before that of a new EV. So if you got both in the same tax year, any excess rebate will not carry forward to the next year (assuming the excess comes from the EV). ie. If you have a $10,000 tax liability and a $5000 rebate for solar and $7500 for a new M3, the remaining $2500 rebate would be lost because it theoretically came from the M3 since the solar is applied first.

Am I understanding this correctly? Anyone else going solar at the same time?

 

[Rockster]

I am in the same boat. I don't know anything about the order of application but I also believe that solar credit will carry forward but EV credit does not.

 

[scottman71]

I know that the solar can carry forward, but the question is whether or not it needs to be applied before the EV credit.

 

[fnce_prof]

Simple. Update your W-4 and change your deductions so that your total tax liability is over $10000.

 

[bobby721]

Simple. Update your W-4 and change your deductions so that your total tax liability is over $10000.

Changing withholding does not change your tax liability. Withholding is simply "how much do I have saved to pay my tax liability"

You could do other things to increase your tax liability (covert some pre-tax accounts to a Roth, etc...) if you really needed to.



As for the original question. Based on a mock return I just did in 2017 tax software it looks like the EV credit is applied first and then the necessary portion of the solar credit is applied. Good to know! Same for educational credits, child tax credits, dependent care, etc...
Now many things are changing in 2018 but I would think that the credits would be applied in the same fashion in 2018.

 

[bobby721]

If anyone wants to dig deeper into this take a look at instructions for line 14 on form 5695. It asks you to tally up other credits (including form 8936).

 

[scottman71]

As for the original question. Based on a mock return I just did in 2017 tax software it looks like the EV credit is applied first and then the necessary portion of the solar credit is applied. Good to know! Same for educational credits, child tax credits, dependent care, etc...
Now many things are changing in 2018 but I would think that the credits would be applied in the same fashion in 2018.

I had a tax friend do the same thing and the results matched yours. Were you using "Drake" software?