Taxes are based on taxable income, not AGI. Your standard deduction or itemized deductions are deducted from AGI to arrive at taxable income. You could also be subject to other taxes such as self-employment tax or tax on early withdrawal of an IRA/401K, which are included in total tax.
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Tax Credit Question Is it true ?
- Thread starter weflybye
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The car should be registered to the spouse with the below $150K AGI who separately filed
exxxviii
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Taxable income is adjusted gross income for most people. You are thinking of gross income. You subtract deductions from gross income to arrive at AGI.
Sir, I am a CPA. I have prepared countless income tax returns including for many high net worth individuals over the past 38 years. Please do not spread false information that members of this forum could rely on. I was correcting the poster, Mayo who stated that we pay our taxes based on the AGI line of the federal tax form.
exxxviii
Member
Doh, my bad. I will edit my post above. In my mind, I was thinking of line 15 on the 1040, but AGI is really line 11.
Edit: well crap, the forum software won't let me edit that post.
You are correct , I stand corrected . I was not attempting to teach a tax prep class. Just giving a simple to understand the principle of applying the Fed Tax Credit. Most of us do not have a complicated income tax filing. Yes some of us do pay taxes off the AGI. Everyones taxes are different. But back to the FED TAX CREDIT there is alot of misunderstanding on what a tax liability is vs a refund.
Here is a definition of what AGI is:
Adjusted gross income (AGI) is a variation of your gross income that accounts for certain deductions that usually make it lower than your gross income. By contrast, gross income is the total amount of money you earn in a year before income taxes or other deductions are taken out. Because of this distinction, AGI is typically the foundation for calculating how much you’ll owe in taxes.
Your AGI heavily affects what deductions and credits you’re eligible for in a tax year. For example, if you have a low AGI, you’ll likely be able to claim more in deductions and credits than someone with a higher AGI.
The taxpayer has to have title to the vehicle, and as long as their name is on the title as an owner, they have title.
Registration would be for any "put into service" element.
The name would need to be on the title.
Just in case anyone's curious, if married filing separately, both names can be on the title. Obviously only one of them can claim the credit.
Previously, I've heard people advising others to just have the name of the person claiming the credit on the title, and not to include any others on the title. That's not necessary.
TesslaBull
Member
Any chance of a Dec 28th delivery being "placed into service" on January 1st for tax credit, non business?
Unless it is a 7 seater it didn't qualify till Jan 13th anyways. But I'm sure the answer is no even if it is a 7 seater.Any chance of a Dec 28th delivery being "placed into service" on January 1st for tax credit, non business?
Sorry pal, you're SOL. The term placed into service applies to businesses anyway.Any chance of a Dec 28th delivery being "placed into service" on January 1st for tax credit, non business?
In all these replies I've seen it mentioned a number of times that the credit will not be able to be carried forward, meaning if you don't have at least 7500 tax liability you can only claim the amount of liability you do have.
What I want to know is the source of these statements. I've checked the IRS site and haven't seen it mentioned.
I have claimed a variety of tax credits over the years (mostly related to solar) and they could all be carried forward if there was insufficient liability in the initial year of claim.
About to buy my first Tesla and this is key to me. I'm one of those people who due to various investments have limited federal liability in any given year.
What I want to know is the source of these statements. I've checked the IRS site and haven't seen it mentioned.
I have claimed a variety of tax credits over the years (mostly related to solar) and they could all be carried forward if there was insufficient liability in the initial year of claim.
About to buy my first Tesla and this is key to me. I'm one of those people who due to various investments have limited federal liability in any given year.
Claiming the Federal Tax Credit
A tax credit means an EV buyer will receive up to a $7,500 reduction in their tax liability for the year. But this is a flat credit, which means it is only worth the full $7,500 if the individual’s tax bill is at least $7,500. If an EV buyer has a tax bill of, say, $3,000 at the end of the year, the EV tax credit can only be a maximum of $3,000. The IRS will not go over and above this total tax liability figure, and in this example, the remaining $4,500 of the EV’s total tax credit will not be usable. Furthermore, that unused portion will not apply to future years’ taxes.Claiming the federal tax credit occurs when filing a yearly tax return. The IRS has included a section that addresses the purchase of electric vehicles. Like anything else tax-related, it is best to consult an accountant or tax expert to claim an EV tax credit correctly.
How Does the Federal Tax Credit for Electric Cars Work?
It's pretty clear:
"The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years."
Also, 7500 tax liability is super small. Only people I know who don't meet that and who (financially) should be buying a $60K car are small business owners or those retired and living off investments. But how much you pay yourself is flexible. Just tell your accountant to pay you more or crystallize more gains this year so you meet the tax liability.
Thanks for the reply, however non- refundable is different from being able to carry it forward, in this case though, via more research, (unless the IRS changes previous EV credit advice) the result is the same. According to what I found on the IRS website (I prefer horse mouth) PV (solar) tax credits have and remain eligible for carry forward - meaning if you don't have enough liability to use it all this year you can "carry forward" the credit to following years, however for whatever reason EV credits have not been.
Don't you recall Warren Buffett pays less tax than his secretary. I am both a small business owner and living off investments. And yes, at least I have all year to work it out with some accounting adjustments.
Here is the IRS Tax Table: https://www.irs.gov/pub/irs-pdf/i1040tt.pdf
In general terms, if you make at least $54,000 and file single, your tax is $7,503. Enough for the full $7,500 amount.
In general terms, if you make at least $54,000 and file single, your tax is $7,503. Enough for the full $7,500 amount.
“You can’t apply excess credit to future tax years.”
I don’t know how it can get anymore clear than this. It was right in the quote I provided you. To be even more clear, you cannot carry forward this credit. It is not like a solar credit.
Also, buffet pays a lower tax RATE than his secretary, not less tax dollars. That tidbit has been misused countless times.
Macb00kemdanno
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Joe Manchin is trying to screw us over!
arstechnica.com
Manchin writes bill to stop temporary electric vehicle tax credits
The senator wants his domestic minerals requirement implemented immediately.
arstechnica.com
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