Tax Credit question...specific situation

Withholding is meaningless. The only thing that applies is your tax liability. If your tax liability is $4800 or more after applying any other tax credits you can take the Prime’s full tax credit.

 

What is unknown is if certain legislation is in play passes you may be able to claim an extra $2500

 

You are wasting your (and our) time talking about how much was withheld from your pay for taxes. What you need to look at is how much Federal taxes you owe for the tax year. And if you have an additional dependent, you will owe less taxes. Look at last year's Form 1080, if you submitted one. Line 24 is your total tax liability for the tax year. That is the number that is important.

 

I don't think it matters if you defer collecting half of the child tax credit this year instead of getting it normally with your return next year. IRS will be prepaying the credit if you get it this year.

The child tax credit is "refundable" meaning you would get it regardless of what your 2021 tax liability turns out to be. You could owe zero, $1,000, or whatever. The car tax credit is different. It requires you to owe $4502 or more in order to get the car credit.

You do need to look at tax owed from 2020 to get an idea of your tax owed for 2021 and not tax withheld. Excess withheld is simply refunded because you paid too much.

Car tax credits are paying the taxes you actually owe which varies by your income, normal deductions, dependents, etc. Other 2021 stimulus payments are not taxable income.

Bottom line, the child tax credit is yours no matter if you collect half early this year or get it all next year. The child credit phases out slowly if you have over $400k in income. There's no strategy left if you already bought the Prime.

 

Interesting. That is the first time I have been called a prick for trying to help someone.

 

You may be able to increase your tax liability by converting a traditional IRA. I am no tax expert, but I have used this before.

Roth IRA Conversion Rules

You can also realize capital gains, if you have any, by selling shares that have increased in value. This all can get complicated and will have a variety of implications including on your state taxes (if you have them in your state).

I sure hope that they convert this incentive so it is a credit so it will help folks with lower incomes and lower tax liability. It seems unfair to leave out folks with lower incomes.

 

elite, you have enough money at play here to take your question to a tax pro. I'm pretty well informed on tax matters, and I can't find a clear answer to your question. I think you'll get all or part both credits...the child tax credit is refundable--you get the money even if your 2021 Total Tax (line 24 on the 2020 1040 for example) is less than the credit. The electric car tax credit is not refundable--you only get this credit up to your Total Tax amount. I think that's the case......but I wouldn't bet 25¢ that I'm right. Go to a tax pro. It all has nothing to do with income withholding, or refund amount, or anything except that Total Tax amount on your 1040.

 

Receiving the monthly payments is just an advance on your refund, it doesn't change the calculations. The child tax credit is increased for 2021. If you last took the credit in 2019, the calculations are now different.

If your son is under 6, the child tax credit for 2021 is increased $1,600 from 2020, to $3,600. If your son is over 6, but under 17, the credit is increased $1,000 from 2020 to $3,000 in 2021. Assuming everything else is identical, your 2021 refund would be $6,400 or $5,800 depending on the age of your son.

The increased child tax credit counts first since it is a refundable credit. If your situation were identical to 2019 in all ways other than the car purchase that would leave you with $2,300 or $2,900 to apply to the EV credit. As far as I know there are no accounting changes that can be made to change that.

 

Our Canadian incentives are a pure rebate, available to all regardless of tax status, and applied to the final purchase price (after sales taxes). I live in Quebec, currently the most generous combined federal and provincial rebate (6500$ [2500$ federal and 4000$ provincial] for PHEV/BEV under 15 kWh capacity and 13,000$ [5000$ federal and 8000$ provincial] (for 15kWh or greater). When I bought my Prime, the dealer calculated my final price with tax and then deducted 6500$ at the point of sale. My income tax situation was simply not a consideration. That seems far more equitable than the US system that appears to disproportionately favour higher income brackets. Also, there are price ceilings (not identical at provincial and federal levels) so no one is receiving a government subsidy for a Model S Plaid or a Taycan Turbo S. But, to each country’s own.

 

The higher income people had to pay those taxes to be eligible to get some of them back in the form of rebates. If you're getting back more than you paid, that means somebody else is being forced under the penalty of prison to pay for some of your decision to purchase a car. That doesn't seem very equitable to me, especially considering that mega global corporations are the recipients of that confiscated income.

Imagine you and a stranger were both mugged on the street one day - you had $100 in your wallet and the stranger had $200. If the police recovered that money would you say it was unfair that the rich guy got $200 back and you only got $100?

 

First world problems

 

You mean Form 1040, right?

 

That seems to be a much better system. It will help more people decide to go electric. We don't have enough tax liability to make the purchase make sense. I suspect that there are lots of folks with the same problem. Fortunately our Gen2 is still working well! 150k miles and counting. We have enjoyed it since new in 2008.

 

Your example isn't comparable to tax police.

Incentives for EVs are there to support the technology, improve energy independence, reduce carbon emissions, etc. which will benefit all citizens in time. Limiting it to those with higher incomes doesn't support equal access of government, and will delay the end benefits as those result from having more EVs on the road.

Under your argument, the lower income should be paying tolls, because they paid less in taxes to roads.

 

Sounds like OP pays enough total taxes to take the credit in 2021.
If not get back to us for creative ideas (eg; IRA withdrawals etc)..

 

Taxation is NOT theft and individuals do NOT have a right to decide where tax dollars are spent at a micro level (unless of course I can veto buying fighter jets because I think they’re unnecessary). I pay far more taxes than most of my fellow citizens (our household income puts us in the top 4% of Canadian household income) and I have no issues with the fact some get more out than they put in. I live in a society, not as a hermit off-grid. Society functions best when it has public services of many types (even fighter jets ) and everyone in society benefits from a healthy population (access to healthcare, cleaner environment, education, public roads, etc.). My taxes, as imperfectly as they are managed, make for a better society (of which I am a member) than if such services were absent.

As this is not a politics board, I’ll leave it at that—and one more specific point. I am more than happy to see my government push for greener vehicles using some of my taxes, even if my neighbours get more back than I do.

 

Right.