PSA: CVRP waitlist checks being sent out

[2002]

You need to OWE $7500 in taxes to receive the credit.

Correct (pretty sure MarkS never said you didn't)

So you don’t want to have a large amount deducted.

Wrong. Receiving the credit has nothing to do with how much someone had withheld from their paycheck during the year. It is based solely on tax liability, which is calculated on the IRS form prior to when withholding is applied.

It is late in the year but there is still time to change your deductions to have the least amount taken out of your check.

Unnecessary. Tax withheld during the year does affect how much you get back (or pay) at tax time but it has nothing to do with how much tax you ultimately pay and also has nothing to do with receiving the plug-in credit.

Again, it is a credit, not a refund.

It's actually what is known as a nonrefundable credit. A nonrefundable tax credit allows you to lower your tax liability to zero, but not below zero. That's why you need to make sure you have at least $7,500 in tax liability in order to benefit from the full amount of the credit.

 

[cokeb5]

Wrong. Receiving the credit has nothing to do with how much someone had withheld from their paycheck during the year. It is based solely on tax liability, which is calculated on the IRS form prior to when withholding is applied.

Thanks for clarifying, this is exactly my understanding as well. There's definitely a lot of confusion revolving around these credits...

 

[MPower]

The other strategy for people without enough tax liability to take the entire credit is to find a dealer that will deduct the 7500 from the cost of a lease in addition to whatever other discount you can dicker down. Under a lease, the dealer can claim the credit on a leased vehicle.

In another thread, a member says that it is possible to negotiate a one payment lease. Does anyone remember that discussion?

 

[Landshark]

Correct (pretty sure MarkS never said you didn't)




Wrong. Receiving the credit has nothing to do with how much someone had withheld from their paycheck during the year. It is based solely on tax liability, which is calculated on the IRS form prior to when withholding is applied.

Unnecessary. Tax withheld during the year does affect how much you get back (or pay) at tax time but it has nothing to do with how much tax you ultimately pay and also has nothing to do with receiving the plug-in credit.



It's actually what is known as a nonrefundable credit. A nonrefundable tax credit allows you to lower your tax liability to zero, but not below zero. That's why you need to make sure you have at least $7,500 in tax liability in order to benefit from the full amount of the credit.

You are correct about what Mark didn’t say.

 

[Landshark]

If you’re correct about how wrong I am I’ll be a happy camper when our accountant prepares our taxes.

The $7500 will go a long way in restoring my self esteem.

 

[JCA]

If you’re correct about how wrong I am I’ll be a happy camper when our accountant prepares our taxes.

The $7500 will go a long way in restoring my self esteem.

I think you will be a happy camper -- tax liability is not the same as owing or being due a refund. If you have more than $7500 in tax liability for 2019 in the end (line 11 of your 1040), you can take the full credit. The EV credit goes into line 12 of the 1040 (via form 8936 and schedule 3), and offsets the tax on line 11. Line 13 is where the credit is partially or fully lost if your total tax liability wasn't at least $7500 (where it says if less than 0, put in 0).

The amount of tax that was withheld doesn't even get entered until line 16, and has nothing to do with whether you get the tax credit or not. The credit will of course result in paying less or getting a larger refund than you otherwise would have on April 15th.

 

[Landshark]

I think you will be a happy camper -- tax liability is not the same as owing or being due a refund. If you have more than $7500 in tax liability for 2019 in the end (line 11 of your 1040), you can take the full credit. The EV credit goes into line 12 of the 1040 (via form 8936 and schedule 3), and offsets the tax on line 11. Line 13 is where the credit is partially or fully lost if your total tax liability wasn't at least $7500 (where it says if less than 0, put in 0).

The amount of tax that was withheld doesn't even get entered until line 16, and has nothing to do with whether you get the tax credit or not. The credit will of course result in paying less or getting a larger refund than you otherwise would have on April 15th.

I like how you explain things. Thank you.

And I should have known better that to believe the dealers explanation of how it worked.