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Tax credit 2023 [The tax credit discussion thread]
- Thread starter CrazyRabbit
- Start date
I asked one of our accountants at work about this a couple of months ago after I read this suggestion. She grimaced and said that if my employer didn't withhold tax, then I'd need to pay my own tax quarterly based on the withholding schedule and if I didn't I'd be fined and possibly audited.
The tip wasn't to cease withholding taxes, it was to reduce the withholding amount. That withholding schedule is based on the number of dependents you claim. If you're single, you probably claim 0 or 1, very common. Married or head of house hold, you'll reduce the withholding by increasing that to 2 or 3.
I don't think your accountant understood DP26, but this is how I read his tip.
GreenHokie
Member
Exactly. What DP26 suggested was… if you are certain you will be eligible for the $7500 tax credit (or any EV credit amount), you do not have to wait until 2024 to realize/redeem that credit. Instead, you can start getting some of that money right now. How? Well, as DP26 suggested, simply reduce your currently withholdings from every paycheck, so you get more take-home money at every pay period. If you do the match correctly, by the time 2024 arrives, you would have already accumulated/gotten your $7500 from all your pay checks throughout 2023. Clear as mud…
No - that makes total sense. $7,500 / 52 weeks = $144/week. For a person making less than six figures, that's anywhere from most or more than their current withholding. If they go too far into the six-figure range, there is no tax credit. Unless I'm missing something (which I probably am because I'm an engineer and not an accountant), I see this only being a minor benefit to a small percentage of buyers at best. 
Zero withheld is perfectly legal no matter the income. What is not suggested is not meeting the required withholding/deposits which can incur a penalty. In other words, even with a large income, one can defer paying taxes if they wish, at risk of penalty. The advice claimed to be from an accountant is CYA advice, not legal advice.
While the irs prefers regular deposits, there are perfectly legal ways to defer deposits for wage liabilities until Dec 31 or even later. It takes knowledge and the ability to pay when due. Not something the average employee should do, nor do most experts even talk about even if they are doing it themselves.
In this case, if you believe you will benefit from the credit, and don’t want to wait, there are easy ways on your w4 to effectively lower your withholding for the remaimder of the year.
While the irs prefers regular deposits, there are perfectly legal ways to defer deposits for wage liabilities until Dec 31 or even later. It takes knowledge and the ability to pay when due. Not something the average employee should do, nor do most experts even talk about even if they are doing it themselves.
In this case, if you believe you will benefit from the credit, and don’t want to wait, there are easy ways on your w4 to effectively lower your withholding for the remaimder of the year.
And yea, things have been and could be retroactively changed. Example is the employee retention credit, the last quarter was retroactively cancelled after many employers had held back the credit amount and even spent it. The “funds” were diverted to other programs, none of which helped employers in general.
Not likely to happen here, since Manchin already tried and failed.
So be aware of politics and if you believe the credit may be cancelled, don’t count on it for affording the vehicle.
Not likely to happen here, since Manchin already tried and failed.
So be aware of politics and if you believe the credit may be cancelled, don’t count on it for affording the vehicle.
Most who are able to afford a new vehicle on a whim have enough tax liability to benefit from the full credit. This time of year just look at your 2022 return to see your total tax liability, if you did not already know it. If you are close, say your liability was 8500 or less, you may not get the full credit, but it is still a good credit for most. (Inflation in 2022 altered bracket levels significantly for 2023 so same wages for 2022 amd 2023 May result in 5 or more percent less liability than 2022.)
I just revised my withholding from my pension by reducing it $750/month for the next 10 months.
I've collected the tax credit 6 times now since 2016. That is $45,000 saved!!! AnI get to claim it again when I file next year for 2023 for the Model Y I took delivery of yesterday.
I did the same thing in 2020 when I bought an EV early in the year.
Last tax year, 2022 I bought a Leaf in November so I didn't have time to modify my withholding. I just received a $6,619 refund after filing my taxes since I claimed the $7,500 for the Nissan Leaf I bought in November.
I've collected the tax credit 6 times now since 2016. That is $45,000 saved!!! AnI get to claim it again when I file next year for 2023 for the Model Y I took delivery of yesterday.
I did the same thing in 2020 when I bought an EV early in the year.
Last tax year, 2022 I bought a Leaf in November so I didn't have time to modify my withholding. I just received a $6,619 refund after filing my taxes since I claimed the $7,500 for the Nissan Leaf I bought in November.
What are the federal tax incentives for getting a Tesla Wall Charger installed? My state (Delaware) doesn't provide any tax incentives for residential chargers unfortunately - and I wasn't readily aware of federal tax incentives for residential chargers...
30% of costs to install, I believe: About Form 8911, Alternative Fuel Vehicle Refueling Property Credit | Internal Revenue Service
Looks like changes will be announced this month and take effect immediately....
U.S. to allow Japan-provided materials in EV tax credit scheme
U.S. to allow Japan-provided materials in EV tax credit scheme
Washington and Tokyo are preparing to make Japanese vehicles eligible for tax credits in a U.S. initiative for electrified vehicles that use critical minerals from the United States or countries that it has free trade agreements with, sources familiar with the talks said on March 21.
Washington and Tokyo are preparing to make Japanese vehicles eligible for tax credits in a U.S. initiative for electrified vehicles that use critical minerals from the United States or countries that it has free trade agreements with, sources familiar with the talks said Tuesday.
Under the changes, the United States would relax the rules to allow EVs to contain key minerals provided by Japanese companies, such as parts makers, despite Tokyo not holding a free trade agreement with Washington.
Promoting EV uptake is a key U.S. government policy. As part of its Inflation Reduction Act passed in August 2022, it offers tax credits of up to $7,500 on purchases of electrified vehicles that come off North American assembly lines and in which a certain amount of battery-critical minerals are sourced or processed domestically or from free trade agreement countries.
Japanese companies play a major role in processing minerals sought for electric vehicle production, and both governments have decided that easing requirements will be mutually beneficial, the sources said. The changes are expected to be announced by the U.S. Department of the Treasury this month and take effect immediately, they said.
The relaxation will likely help Japanese firms compete on a level playing field against rivals in countries such as South Korea, which has a free trade agreement with the United States.
Japan and European countries have previously protested conditions that exclude them from joining the American Clean Vehicle Credit scheme.
In its campaign seeking eligibility, Tokyo submitted a letter to the U.S. government in November calling on requirements for the scheme to be eased, and senior figures have requested that revisions to the requirements be made.
But attempts by European countries, Japan and South Korea to negotiate with the United States on easing its domestic final assembly conditions have stalled, and foreign manufacturers will likely expedite moves to create assembly bases in countries and territories eligible for the breaks.
Following a detailed announcement of the changes, the U.S. Treasury intends to hear the views of many overseas administrations and firms on the need to relax requirements.
Looks like changes will be announced this month and take effect immediately....
U.S. to allow Japan-provided materials in EV tax credit scheme
U.S. to allow Japan-provided materials in EV tax credit scheme
Washington and Tokyo are preparing to make Japanese vehicles eligible for tax credits in a U.S. initiative for electrified vehicles that use critical minerals from the United States or countries that it has free trade agreements with, sources familiar with the talks said on March 21.english.kyodonews.net
KYODO NEWS - 2 hours ago - 21:26 | All, World, Japan
Washington and Tokyo are preparing to make Japanese vehicles eligible for tax credits in a U.S. initiative for electrified vehicles that use critical minerals from the United States or countries that it has free trade agreements with, sources familiar with the talks said Tuesday.
Under the changes, the United States would relax the rules to allow EVs to contain key minerals provided by Japanese companies, such as parts makers, despite Tokyo not holding a free trade agreement with Washington.
Promoting EV uptake is a key U.S. government policy. As part of its Inflation Reduction Act passed in August 2022, it offers tax credits of up to $7,500 on purchases of electrified vehicles that come off North American assembly lines and in which a certain amount of battery-critical minerals are sourced or processed domestically or from free trade agreement countries.
Japanese companies play a major role in processing minerals sought for electric vehicle production, and both governments have decided that easing requirements will be mutually beneficial, the sources said. The changes are expected to be announced by the U.S. Department of the Treasury this month and take effect immediately, they said.
The relaxation will likely help Japanese firms compete on a level playing field against rivals in countries such as South Korea, which has a free trade agreement with the United States.
Japan and European countries have previously protested conditions that exclude them from joining the American Clean Vehicle Credit scheme.
In its campaign seeking eligibility, Tokyo submitted a letter to the U.S. government in November calling on requirements for the scheme to be eased, and senior figures have requested that revisions to the requirements be made.
But attempts by European countries, Japan and South Korea to negotiate with the United States on easing its domestic final assembly conditions have stalled, and foreign manufacturers will likely expedite moves to create assembly bases in countries and territories eligible for the breaks.
Following a detailed announcement of the changes, the U.S. Treasury intends to hear the views of many overseas administrations and firms on the need to relax requirements.
They need to wait 9 more days...
Does Tesla currently use material from Japan and is eligible for the full $7500 credit.
More interested in this statement:
"Japanese companies play a major role in processing minerals sought for electric vehicle production, and both governments have decided that easing requirements will be mutually beneficial, the sources said. The changes are expected to be announced by the U.S. Department of the Treasury this month and take effect immediately, they said"
"Changes take effect immediately... " - was hoping they'd say vehicles already ordered get the credit..
As for Japan - more applicable to competition from Toyota / Honda etc.. but including their processing minerals will help make credit more likely. Don't know about Tesla... and may depend on which car / battery..
"Japanese companies play a major role in processing minerals sought for electric vehicle production, and both governments have decided that easing requirements will be mutually beneficial, the sources said. The changes are expected to be announced by the U.S. Department of the Treasury this month and take effect immediately, they said"
"Changes take effect immediately... " - was hoping they'd say vehicles already ordered get the credit..
As for Japan - more applicable to competition from Toyota / Honda etc.. but including their processing minerals will help make credit more likely. Don't know about Tesla... and may depend on which car / battery..
The changes take effect +1 day AFTER... thats the language in the IRS guidance.
First and foremost 7500 is tax credit.No - that makes total sense. $7,500 / 52 weeks = $144/week. For a person making less than six figures, that's anywhere from most or more than their current withholding. If they go too far into the six-figure range, there is no tax credit. Unless I'm missing something (which I probably am because I'm an engineer and not an accountant), I see this only being a minor benefit to a small percentage of buyers at best.
Which means your tax liability must be >7500 to claim full credit.
If your tax liability is, say, only 5000....your benefit is 5000.
My calculations says to have 7500 tax liability the income must be >68000 to get full benefit. For incomes less than 68k you liability is whatever you paid. There is an upper income limit as well.
401k contribution not included in 68k
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