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Tax credit question!

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This is a simplification, but for those that like math... normally, at tax time:
Tax you owe for the previous year = x
Tax you paid during the previous year = y
If x is more than y you owe the IRS x-y dollars
If y is more than x IRS owes you y-x dollars

If you have the tax credit:
Tax you owe for the year = x - 7500. If this is less than zero, then it is clamped to 0
Everything else is the same as above...
 
I have to wonder if everyone citing their "tax guy" in this thread misunderstood their tax guy, or if everyone's tax guy is retarded...

As others have said, if you owe $7500 or more at the end of the year (line 44 on your 1040), then you will get the full credit. The IRS will issue you a refund if your withholding had you pay a portion of that money already. Unless you're having desperate cashflow problems right now (and if you are, what the **** are you doing buying a new Model 3?), there's no reason to bother changing your withholding.
 
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I have to wonder if everyone citing their "tax guy" in this thread misunderstood their tax guy, or if everyone's tax guy is retarded...

As others have said, if you owe $7500 or more at the end of the year (line 44 on your 1040), then you will get the full credit. The IRS will issue you a refund if your withholding had you pay a portion of that money already. Unless you're having desperate cashflow problems right now (and if you are, what the **** are you doing buying a new Model 3?), there's no reason to bother changing your withholding.

Probably for another discussion, but if you're always getting a refund at tax time, you probably should adjust your withholding. No point in giving the government a interest-free loan.
 
Fire your tax guy right now!!!! ... he’s an idiot.

Guys... this is not hard. The calculation of your taxes has NOTHING to do with your withholding. You can have way too much taken out of your paycheck or way too little.... but these prepayments are not going to change what tax you owe each year. It only impacts WHEN you give up the money. Your taxes will be calculated by your income from all sources minus all your deductions to get your adjusted income which determines your taxes. Then you can subtract credits from that tax amount. As long as the tax obligation was at least 7500, you can take the 7500 credit.

Whether you withheld more or less than you were obligated to pay will determine if you get money back in April or need to make up a shortfall, but that isn’t how much you “owe” for taxes for that tax year.

Wait. Rules are different for business. Poster who wrote "over 10 years" might be filing differently than the typical individual.
 
Fire your tax guy right now!!!! ... he’s an idiot.

Guys... this is not hard. The calculation of your taxes has NOTHING to do with your withholding. You can have way too much taken out of your paycheck or way too little.... but these prepayments are not going to change what tax you owe each year. It only impacts WHEN you give up the money. Your taxes will be calculated by your income from all sources minus all your deductions to get your adjusted income which determines your taxes. Then you can subtract credits from that tax amount. As long as the tax obligation was at least 7500, you can take the 7500 credit.

Whether you withheld more or less than you were obligated to pay will determine if you get money back in April or need to make up a shortfall, but that isn’t how much you “owe” for taxes for that tax year.

Wait. Rules are different for business use. Poster who wrote "over 10 years" might be filing differently than the typical individual, or might have been confused about the claim.
 
I have to wonder if everyone citing their "tax guy" in this thread misunderstood their tax guy, or if everyone's tax guy is retarded...

As others have said, if you owe $7500 or more at the end of the year (line 44 on your 1040), then you will get the full credit. The IRS will issue you a refund if your withholding had you pay a portion of that money already. Unless you're having desperate cashflow problems right now (and if you are, what the **** are you doing buying a new Model 3?), there's no reason to bother changing your withholding.
I'm betting that the tax people are trying to dumb it down by saying "owe" instead of "liability" and people are getting confused.
 
Fire your tax guy right now!!!! ... he’s an idiot.

Guys... this is not hard. The calculation of your taxes has NOTHING to do with your withholding. You can have way too much taken out of your paycheck or way too little.... but these prepayments are not going to change what tax you owe each year. It only impacts WHEN you give up the money. Your taxes will be calculated by your income from all sources minus all your deductions to get your adjusted income which determines your taxes. Then you can subtract credits from that tax amount. As long as the tax obligation was at least 7500, you can take the 7500 credit.

Whether you withheld more or less than you were obligated to pay will determine if you get money back in April or need to make up a shortfall, but that isn’t how much you “owe” for taxes for that tax year.


Understood.. I just did not use the correct terminology.. Can make adjustments to income and possible deductions and have an estimate of full year projected income and taxes due... You are totally correct..