Tax Credit Clarification

[lupend88]

Yes, I was in line at Washington Square...

You have control to increase your tax liability by doing a few things:

• Making more money.
• Converting Traditional IRA money to a Roth IRA
• Selling stock to have a realized/taxable gain.
• etc.

Thank you so much! I got in the line pretty late at Washington Square but it was still a fun experience and nice to have reserved 3/31.

 

[jonnyg]

Thank you for the help, also nice to talk to a fellow Oregonian, did you line up at Washington Square for your car? Is my tax liability something I have control over?

It's probably earlier in this thread somewhere, but if you look at line 47 of your 1040 forms over the last few years then that should give you an estimate of your tax liability. If you want to be really specific, you could fill out the 8936 form to get a more exact number. I think you end up subtracting lines 48-51 (other credits) from 47. So a few other tax credits you may or may not qualify for will get subtracted off your liability first.

 

[lupend88]

It's probably earlier in this thread somewhere, but if you look at line 47 of your 1040 forms over the last few years then that should give you an estimate of your tax liability. If you want to be really specific, you could fill out the 8936 form to get a more exact number. I think you end up subtracting lines 48-51 (other credits) from 47. So a few other tax credits you may or may not qualify for will get subtracted off your liability first.

Wonderfully helpful, thank you!

 

[Garlan Garner]

@gregincal summed up my thoughts on it. The median US household income is $51K and the average tax liability for those making $50K to $100K is $6251. Somewhere above 50% of American households pay less than $7500 a year.

Where is the intent for this to be for the wealthy? I'm not looking for thoughts. I'm looking for facts. Where is the fact that this is intended for the wealthy? Link? The tax credit isn't based on income nor tax bracket. Its for everyone.

The Chevy Bolts tax credit isn't for the wealthy. All they have is a bolt for crying out loud. How many wealthy people are going to buy a bolt? Same for the Nissan Leaf. Wealthy people aren't buying the leaf either.

The tax credit is for EV vehicles per vendor. No matter what car they make.

 

[Jersey Shore Tom]

Where is the intent for this to be for the wealthy? I'm not looking for thoughts. I'm looking for facts. Where is the fact that this is intended for the wealthy? Link?

The Chevy Bolts tax credit isn't for the wealthy. All they have is a bolt for crying out loud. How many wealthy people are going to buy a bolt? Same for the Nissan Leaf. Wealthy people aren't buying the leaf either.

The tax credit is for EV vehicles per vendor. No matter what car they make.

Who knows what people were thinking when they voted for the tax credit, but in 2016, a married person was unlikely to able to get the full tax credit unless their household income was in top 40%. Back in 2012 it would likely have taken a top 30% income. Whether top 30% is wealthy or not you can decide, but it certainly isn't lower income.

 

[Garlan Garner]

Who knows what people were thinking when they voted for the tax credit, but in 2016, a married person was unlikely to able to get the full tax credit unless their household income was in top 40%. Back in 2012 it would likely have taken a top 30% income. Whether top 30% is wealthy or not you can decide, but it certainly isn't lower income.

What? Did we switch topics?

 

[Jersey Shore Tom]

What? Did we switch topics?

You asked for facts to support the idea that the tax credit was designed to go the wealth. I was pointing out, as had others, that you have to be at least semi wealthy to get the whole tax credit.

 

[Garlan Garner]

You asked for facts to support the idea that the tax credit was designed to go the wealth. I was pointing out, as had others, that you have to be at least semi wealthy to get the whole tax credit.

That's not true. Its a credit....not a deduction. At least that's what it's defined as.

 

[S3XY]

That's not true. Its a credit....not a deduction. At least that's what it's defined as.

Yes, it's a credit but it's not a refundable credit. So you can't take more of a credit than what your tax liability is. Many have already pointed out the tax form line number that applies (i.e. limits your credit).

 

[MP3Mike]

That's not true. Its a credit....not a deduction. At least that's what it's defined as.

It is but it is a non-refundable tax credit. So if you owe no taxes this year you get zero benefit for the EV tax credit. If your total tax liability is $1,000 then you only get to take advantage of 13% of the tax credit.

 

[Garlan Garner]

It is but it is a non-refundable tax credit. So if you owe no taxes this year you get zero benefit for the EV tax credit. If your total tax liability is $1,000 then you only get to take advantage of 13% of the tax credit.

Well I had better go and make myself a large tax bill then.

 

[EVNow]

Who knows what people were thinking when they voted for the tax credit, but in 2016, a married person was unlikely to able to get the full tax credit unless their household income was in top 40%. Back in 2012 it would likely have taken a top 30% income. Whether top 30% is wealthy or not you can decide, but it certainly isn't lower income.

This is correct.

One way Nissan is getting around this is by giving the benefit of the entire $7,500 in their lease. That way even a middle class US family can afford a Leaf.

 

[wdolson]

This may be a dumb question and I apologize in advance if it is, but I am single making $50k a year, do I have decent odds of getting the full tax credit (estimating my M3 will get here Q4 2017 or Q1 2018) or do I need to see my tax guy and have him adjust my withholdings?

Another PDX area person here.

Whether you get the car this year or next will impact which year you get the credit. If you get the car early next year, you can adjust your withholding so you don't have as much taken out of your check and you will not get much of a refund in 2019 when you pay your 2018 taxes. If you get the car in late 2017, you will get most of your federal taxes withheld refunded in 2018 when you do your taxes.

The year you get the car is a good year to do any adjustments to your investing or whatever that could cause a "taxable event".

 

[cpa]

This endless discussion about the tax credit validates the popular concern that our Internal Revenue Code is too complex.

We have fairly intelligent folks on this forum. Yet they struggle to understand how this entire situation works.

I happen to sympathize with all y'all.

We gotta fix our system of assessing income taxes.

 

[dsvick]

This endless discussion about the tax credit validates the popular concern that our Internal Revenue Code is too complex.

We have fairly intelligent folks on this forum. Yet they struggle to understand how this entire situation works.

I happen to sympathize with all y'all.

We gotta fix our system of assessing income taxes.

While I agree with you about the tax code, I think the problem here, in this thread, is that new people get to the thread, decide they don't want to read 26 pages to find their answer, and just repost the same questions that have been asked and answered several times already.

 

[EVNow]

This endless discussion about the tax credit validates the popular concern that our Internal Revenue Code is too complex.

Ofcourse it is too complex. It is written to help millions of donors by thousands of politicians/lobbyists.

 

[SageBrush]

You asked for facts to support the idea that the tax credit was designed to go the wealth. I was pointing out, as had others, that you have to be at least semi wealthy to get the whole tax credit.

"semi-wealthy" is your opinion. I suggest staying with "~ top 40% of US household incomes eligible."

Was the reduced capital gains on investments "designed" to benefit the wealthy ?
Is non-progressive taxation, e.g. on car fuel, "designed" to benefit the wealthy ?
Are the myriad tax breaks only available to small business "designed" to benefit the wealthy ?
Are the tax breaks available to organized religion "designed" to benefit the wealthy ?
Are the tax breaks available to corporations "designed" to benefit the wealthy ?
Are the tax breaks available to homeowners "designed" to benefit the wealthy ?

I'm tired of typing, so if you don't yet see the fallacy in your reasoning I give up.

 

[wdolson]

While I agree with you about the tax code, I think the problem here, in this thread, is that new people get to the thread, decide they don't want to read 26 pages to find their answer, and just repost the same questions that have been asked and answered several times already.

Maybe we need a FAQ thread about the tax credit?

 

[dsvick]

Maybe we need a FAQ thread about the tax credit?

I like it, you start writing, the rest of us will do the peer review

 

[winfield100]

Thank you for the help, also nice to talk to a fellow Oregonian, did you line up at Washington Square for your car? Is my tax liability something I have control over?

Did you put a huge chunk of money in a Roth IRA? Would that increase your federal tax due? Would that count? Talk to a tax person toot sweet