Tax credit

[Guest]

Simple question. If I always get a refund on my fed taxes, does that mean that the ev tax credit is useless to me?

 

[campfamily]

Simple question. If I always get a refund on my fed taxes, does that mean that the ev tax credit is useless to me?

No. What matters is whether your total tax liability was greater than $7500. You can have a tax liability and still get a refund, that just means you had more withheld during the year than what you owed (said differently, you gave the government a tax free loan).

 

[triangles]

What campfamily said. it's how much you owe in federal taxes that counts. For example if you only owe $5,000 in Federal income tax then you only get $5,000 of the $7,500 credit and you lose out on the extra $2,500. It does not carry over to the next year. So in order to use the full credit you must owe at least $7,500 in federal income tax. How much withholding you've had from your paycheck have no bearing. For example if you owe $7,500 in federal tax and $8,000 was withheld from your paychecks you would simply apply the tax credit and get all of your $8,000 back that you so generously loaned interest free to uncle Sam.

 

[EVA]

Probably one of the most confusing things in the world to understand. We all think our tax bill is the amount of money we owe after we file our taxes. Hey I got a refund, so I didn't pay any taxes. Yipeee.

The reality - Triangles got it exactly right - the ideal situation is to have $0 due or $0 in refund when you file your taxes. You are making a free loan to the government if you get a refund every year. Actually the best way to be is to owe exactly $1 less than would get you a penalty for not having enough taxes withheld.

The original question has been answered - if you have a total tax liability of greater than $7,500, the full credit applies. And it applies for multiple cars in the same year, or multiple cars over many years.