Since there's a lot of you who own more than one EV I thought I'd pose the question about the 7500 dollar tax credit. If I bought an EV this year that qualified and my husband bought an EV next year that qualified, could we both claim a credit? Even if we file jointly?
Hi Scooter, Did some quick research and Yes, you could do that. In fact, you could even do the two cars in the same year. No restrictions, other than to get $15,000 you would have to have a tax liability of that much. ( not what you owe, but your total tax for that year). Same applies to one car. ie you need a tax liability of $7500 for each year. Not a refundable tax credit, where you get a check if your liability is not as much as total tax liability. Instructions are on IRS site for form 8936. Following is a post that sums it up. "Theoretically, one entity (person or company) could have claimed 200,000 credits that were available, but as an individual, you would have trouble claiming that you didn't purchase the vehicles for resale. In other words, no restriction on quantity per year or over the course of several years. Look on the instructions for IRS form 8936 https://www.irs.gov/pub/irs-pdf/i8936.pdf. The restrictions are clearly spelled out there on the instructions for the form. The following requirements must be met to qualify for the credit. You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit. You placed the vehicle in service during your tax year. The vehicle is manufactured primarily for use on public streets, roads, and highways. The original use of the vehicle began with you. You acquired the vehicle for use or to lease to others, and not for resale. You use the vehicle primarily in the United States. Click to expand... There are no per year or lifetime limits specified here, so there are no hard limits on filing the credit. The instructions also clearly outline the phaseout process and other common questions related to the EV tax credit. "
I happened to recently look into this, because I'm planning to buy a second EV within the year. The answer is the tax credit is for each EV purchased, regardless of how many you have. But you do not get an automatic $7500 – instead it's a credit against what you owe for taxes. So in order to get $7500 you must owe at least $7500 in taxes for the year you file for the credit. The simple answer is the EV credit is per vehicle.
Thank You! I cancelled my dream MINI so I thought I'd lease an i3 as an interim vehicle until I can get what I really want. This helps.
I don't need 15,000 in tax credits - not rich enough - but i could use the tax credits when I cash in on my IRA's to pay for the car and extra living expenses. I love this forum for all the great advice and answers to questions, some of which I wasn't smart enough to know what to ask!
Note that this credit only applies when purchasing a new EV. If you lease it, you don't get the tax credit (the dealership leasing it does--and may leverage that as some kind of "cash back" or other incentive to you). If you buy a used EV, you don't get the credit, either.
There was the case of someone who bought an EV and managed to total the car within a month. Received full value for the car from insurance and purchased a replacement. They were able to get $15k in credits. In theory, if your tax liability was high enough, you could total 3 MINIs and effectively get the 4th for free. It is also important to understand that it is a credit vs your total tax liability (line 24 on a 1040), not how much you might owe in April (Line 37 of a 1040). So if you play around with your IRA's and that increases your tax liability then you can use the credit to offset that.
Remember, if you have a regular IRA, you can convert some of that to a Roth IRA to generate some tax liability. That's what my wife and I did with our last two cars (Honda Clarity PHEV and MINI EV) to take the full $7,500 tax credit. Now we'll never pay taxes on the converted IRA dollars and there won't be a required minimum distribution later.
Yes, that's the plan, offset the tax liability from cashing in on IRA's. Thanks for the chuckle about getting a fourth car for free! Too bad I don't have enough relatives that like having fun - driving a MINI!
I probably should have researched this a little earlier. We put solar panels on this year too, which is a credit in the neighborhood of $7k. I should look at last year's taxes and adjust the traditional vs Roth withholdings for both me and my wife. I have no idea how much tax we actually paid last year. Edit: We paid about $17.5k in taxes last year, so we should be ok as is with both credits. Thanks for the info, though, I'd hate to find out when it's too late to do anything about it!
Quick note: my understanding is that the federal tax credit for solar panels, unlike the credit for an EV, will actually roll over to the next tax year, if unused.
That's true for the most part but I know at least Ford's lease program for the Mach-E is structured where the consumer can get the tax credit. I don't the know details as I don't lease but I recently purchased the Mach-E and went over very "broadly" some of the pros and cons. Another thing to keep in mind is that if you bought health insurance via the ACA (aka ObamaCare) and are receiving a premium subsidy which is based on your MAGI (modified adjusted gross income) estimate you provided, increasing your income beyond that estimate may cause the amount of subsidy you should of received to be lower, in which case you will have to repay the portion of the subsidy that was (over)paid to you. This all gets recalculated and adjusted next year when you do your taxes for the previous tax year (that we're currently in). One such (small?) group this affects are those on a fixed income but not old enough to receive Medicare yet (e.g. early retirees, out of work, etc) - their tax liability is typically low due to no paycheck coming in and no company insurance to take advantage of group rates (or spouse's plan to go onto) leaving only private or ACA insurance. Your forced to calculate which tax credit/subsidy will benefit you the most. Don't know your situation but thought I would put this out there. CYA - best to consult with a tax account and/or financial advisor.
Question about getting the $7,500 tax credit: If my total tax bill was $24,500 and we had withheld $24,600 from our checks, come tax time we would receive a $100 tax rebate. If we would buy an EV the same year, would I then receive a $7,600 (7,500 + 100) rebate check from the IRS? Or do I need to reduce our bi-weekly withholdings from our checks by a total of $7,500 to take full advantage of the IRS EV tax credit? Cheers,
You do not need to adjust your withholdings. The amount of rebate you can get is based on your tax liability for the year (i.e., the total amount you owe the IRS). Withholdings are a way to "pre-pay" your IRS taxes with each paycheck, but they do not affect what you owe. That's based on your adjusted income. So if you owe more than $7500 in taxes for the year you can get the full rebate.
As I mentioned above, I didn't owe at least $7,500, so I converted some IRA funds to Roth IRA funds to increase my taxes to that level. I didn't want to give up any of that EV benefit. Now I won't have to pay taxes when withdrawing those Roth IRA funds and I won't be forced to take a required minimum distribution from those funds.
On a related note, has anyone from California had any issues with the ~$2000 Clean Vehicle Rebate? My dealer said it would take a few months to receive it but It seems to be always out of funds.
[QUOTE=" Or do I need to reduce our bi-weekly withholdings from our checks by a total of $7,500 to take full advantage of the IRS EV tax credit? Cheers,[/QUOTE] You do not need to reduce your withhold, but you could to have the money earlier rather than getting a big refund.
It’s a waiting list right now. They are receiving around $525 million from the state budget soon. We applied in April and are still waiting.
