[DNGEGN2022]

Good evening,

was wondering if anyone had experience with the $7500 fed tax credit. Is there anything I need to do right away like submit any forms to the IRS? Or do I take care of it when I file my taxes.

Any help would be great. Thanks!

 

[Chairman]

Just when you file, think I gave my CPA a copy of the I voice and the VIN.

 

[Phil Hyde]

Good question!

 

[avh]

You will need to owe $7500 to the IRS for the year, best is to discuss with a tax accountant. You might need to change your W-4 form and add the $7500 to Line 4(b) of the form W-4.
This is not tax advice just general information.

 

[Phil Hyde]

You will need to owe $7500 to the IRS for the year, best is to discuss with a tax accountant. You might need to change your W-4 form and have less tax withdraw. I think there is a field where you can specify the $7500.

Good point, but not really the question. A tax accountant should know for certain, but it is a bit unclear what documentation is required (regardless of the qualifications).

 

[Greg in MD]

Good point, but not really the question. A tax accountant should know for certain, but it is a bit unclear what documentation is required (regardless of the qualifications).

You just enter your VIN number on your 1040 form.

 

[avh]

You will need a copy of the purchase paperwork for your records to keep with your tax return for the next 7 years in case IRS decides to audit your taxes. The government keeps track of what manufacturers still qualify for credits and they publish this every quarter. But again, you will need to owe taxes in order to take advantage of the credit.

I think this is the official website Federal Tax Credits for Electric and Plug-in Hybrid Cars

 

[Phil Hyde]

Also, there is a thread over in the US forum (I didn't know until today that it was there!)

Federal Tax Credit?

@rjax360 Congratulations on the new car. There is some incorrect and misleading advice in some of these posts, so please do some more research or consult a tax professional. The simplest way to look at this is to look at line 24 on your IRS 1040. Let's assume you bought the car last year. The...

www.kiaevforums.com

 

[azKiaUser]

You will need to owe $7500 to the IRS for the year, best is to discuss with a tax accountant. You might need to change your W-4 form and add the $7500 to Line 4(b) of the form W-4.
This is not tax advice just general information.

I'm not an accountant but this is wrong.

The 7500 is a tax credit against what you owe...or your liability. The W-4 doesn't have anything to do with it.

After working for the year, the gov't gives you a bill. That is what you owe. This is based on number of factors...but basically your bill is your bill.

Your W-4 withholding is just a guesstimate to pay-as-you-go...but putting more aside doesn't change what your "bill" was.

I think it's line 24 on your 1040...if it's over 7500 you get the whole 7500.

fyi--you can get multiple rebates if you buy multiple cars...but then you'd need 15000 as a liability

 

[avh]

I'm not an accountant but this is wrong.

The 7500 is a tax credit against what you owe...or your liability. The W-4 doesn't have anything to do with it.

After working for the year, the gov't gives you a bill. That is what you owe. This is based on number of factors...but basically your bill is your bill.

Your W-4 withholding is just a guesstimate to pay-as-you-go...but putting more aside doesn't change what your "bill" was.

I think it's line 24 on your 1040...if it's over 7500 you get the whole 7500.

fyi--you can get multiple rebates if you buy multiple cars...but then you'd need 15000 as a liability

My bad, azKiaUser I think you are right, as long as one owes $7,500 or more in federal faxes for the year it should be covered.

"How do you receive the credits?
The process is fairly simple. You first have to buy a vehicle that qualifies, of course. Then you fill out form 8936 along with your tax return. It is important to note that the credits are non-refundable tax credits, as opposed to refundable tax credits. That means that the credits can only be applied to the taxes you owe in a given year, and if you received more in credits than you owe in taxes, you will not receive the difference in the form of a check. (With refundable tax credits, you would receive that check). Additionally, since the credits don’t roll over, you can only apply the credits to your taxes for one tax year."

How Do Electric Vehicle Tax Credits Work?

Most EVs are eligible for the federal government's tax credit program, which can reduce what you owe the IRS by up to $7500 for single tax year.

www.caranddriver.com

 

[Phil Hyde]

I'm not an accountant but this is wrong.

The 7500 is a tax credit against what you owe...or your liability. The W-4 doesn't have anything to do with it.

After working for the year, the gov't gives you a bill. That is what you owe. This is based on number of factors...but basically your bill is your bill.

Your W-4 withholding is just a guesstimate to pay-as-you-go...but putting more aside doesn't change what your "bill" was.

I think it's line 24 on your 1040...if it's over 7500 you get the whole 7500.

fyi--you can get multiple rebates if you buy multiple cars...but then you'd need 15000 as a liability

Right - the federal tax credit is subtracted from your tax liability first. If you owe less than $7500 then it only eliminates what you owe. If you owe more than $7500 then you'll still have a tax liability. Withholding comes into play later in the equation. If after the tax credit your tax liability is $0, then you'd probably get back all of your withholding.

 

[edwinguz713]

avh beat me to it. It's form 8936. I just checked my tax return. I fill my taxes out through taxslayer and their software walked me through it. Be prepared to wait a while to get your tax return. It took about 3 months after I submitted mine before I got my refund. I think someone actually checks these and it's not just automatic.

 

[encode2]

I am not an accountant, but I've been told by a CPA that more than just line 24 comes into play. As they mentioned to me, if you have paid to the IRS during the year (payroll tax or whatever) and are due a refund the tax credit will not apply. I'm not sure if that's clear. example: if line 24 says your liability is 10K but you have already paid 12K you will not get the tax credit added to the refund.

Like I said I'm not an accountant, so if someone here knows better and can explain, please do.

Fred

 

[Durham EV6]

My bad, azKiaUser I think you are right, as long as one owes $7,500 or more in federal faxes for the year it should be covered.

"How do you receive the credits?
The process is fairly simple. You first have to buy a vehicle that qualifies, of course. Then you fill out form 8936 along with your tax return. It is important to note that the credits are non-refundable tax credits, as opposed to refundable tax credits. That means that the credits can only be applied to the taxes you owe in a given year, and if you received more in credits than you owe in taxes, you will not receive the difference in the form of a check. (With refundable tax credits, you would receive that check). Additionally, since the credits don’t roll over, you can only apply the credits to your taxes for one tax year."

How Do Electric Vehicle Tax Credits Work?

Most EVs are eligible for the federal government's tax credit program, which can reduce what you owe the IRS by up to $7500 for single tax year.

www.caranddriver.com

Love that line... "The process is fairly simple", yet has caused a disturbance on here 🤣

No tax rebate in the UK, that I know of, and if there were, I would want it at point of sale! 👍🎉

 

[jimkelly4]

The words "liability" and "Owe" are the source of enormous confusion because they imply "withholding" and "estimated payments". The reality is really quite simple: Total Tax for the year:

This credit is limited by only your TOTAL TAX for the year. Line 24 on the 1040 shows your total tax. If it is at least $7,500 you will get the whole credit in the form a refund as determined by the rest of your 1040 info. If less, your credit will be reduced. Having determined how much credit you will likely be eligible for you can safely move on to adjusting your withholding to your current desires which is a SEPARATE issue having no effect on the credit itself. Hope this is finally clear, but as long as folks refusing to search for the answer, keep re-asking the same question...

 

[Bkaklinv]

The Tax Credit for the EV is applied first...before any payments you made to the IRS whether through payroll dedication or estimated payments.

Bottom line...If your federal tax liability it $7500 or greater based on your AGI then you will get the whole credit.

If you are unsure consult a tax professional. A few hundred dollars at tax time to make sure you get your maximum tax credit is money well spent.

 

[azKiaUser]

Or...an analogy

Lets say you're going out to dinner for a birthday. An expensive dinner (fondue is a nice way to spend too much money).

You can save up (i.e. your W4) for that dinner throughout the year, but that doesn't change what the final bill will be.

However, you find a coupon before you go to dinner. The restaurant will apply this coupon to your bill. It doesn't matter how much you've saved; the restaurant doesn't care as far as the coupon is concerned. If the coupon is more than your bill they won't hand you cash.

The $7,500 EV Tax credit is a coupon.

 

[qrist12]

There is not limit on how many cars you can get tax credit for in a year, right?

 

[azKiaUser]

There is not limit on how many cars you can get tax credit for in a year, right?

I believe that is correct...but you need the higher tax "bill" to apply your "coupon" to.

I've been trying to convince my SO to sell her 2017 (for almost what she paid)...and get an EV. Ioniq 5 or ID4...but she's spooked by the market and prefers the paid-for ICE instead.

 

[Bkaklinv]

I believe that is correct...but you need the higher tax "bill" to apply your "coupon" to.

I've been trying to convince my SO to sell her 2017 (for almost what she paid)...and get an EV. Ioniq 5 or ID4...but she's spooked by the market and prefers the paid-for ICE instead.

Spooked by the market in what regard?