$4500 tax rebate

Top paragraph says that is the minimum you can get for a passenger vehicle. Bottom paragraph says that because it is the most you can get for smaller than passenger vehicles. The Prius Prime qualifies for $4502. The tax credit is based on the size of the traction battery in the vehicle. You will need the federal tax form 8936. In order to get the full $4502, you have to have a tax liability of at least $4502. If not, you will only get the tax credit amount of your tax liability under $4502. It is a non-refundable tax credit.

#1 in Easley,SC


Merged, use multi quote



30D. New Qualified Plug-in Electric Drive Motor Vehicles – Toyota Motor Sales, U.S.A., Inc.

#1 in Easley,SC

 

That applies to two or three wheel vehicles.





Merged. use multi quote

Exactly right.

One trick that might be available to people with too low a tax liability to take advantage of the full tax credit amount is conversion of an IRA to Roth. This way you get the conversion for free. It would have worked out nicely for me, but my Obamacare premium is tied to my income so the income tax (or Roth conversion cost) savings are offset by increased health insurance premium charges.

 

So does this mean that at the end of the year I have to owe the government $4502 on top of my regular withholding? Or is it enough that I paid the Feds at least $4500 and thus will get the full amount refunded?

 

The latter. As long as you paid them $4502, you will get $4502. This is my understanding of it.

 

Neither.

Reference line 44 on the Form 1040 and then subtract all your other non-refundable credits. If the result is less than $4502, the result is the EV tax credit you will receive.

Addendum: Error corrected -- 'Reference line 44' originally said line 43.

 

And if you're married filing jointly do both spouses incomes count toward the $4502 paid in taxes? Or do they only go by your own withholding?

 

I defer to EV-ish as my reply was not entirely correct.

 

And in that vein I also add a disclaimer: I am not a CPA and have never bothered to learn how AMT affects the variety of credits any one taxpayer may try to collect. The answers that Dalcon and I provide are pretty accurate for reasonably uncomplicated, middle-class tax returns.

 

Thanks for all your help thus far. My original plan was to change by deductions (to 14) in order to create an actual tax bill of $4,500 by not paying in every 2 weeks. It seems I may need to readjust.

 

Tax pre-payments do not change your tax liabiltiy; they change how much you owe or are refunded when you file your 1040.

Nothing in a tax credit -- refundable or not, prevents you from getting a check from the IRS. I know this seems like contradictory information, but it is correct. See if following my post #9 helps, and note that calculations related to amount owed/refunded are later down the form 1040; that is, do not play into your strategy decisions related to optimizing receipt of the EV tax credit.

 

If you want the full tax credit at the end of the year as a refund, you need the $4502 withheld from your pay to cover your tax liability and you would get the $4502 added to whatever you went over your tax liability. Or you can back off your tax withholdings throughout the year and essentially get the credit throughout the year before you file.

#1 in Easley,SC





Merged. use multi quote

They use both.

#1 in Easley,SC

 

This seems like it wouldn't work for some reason. But let's let a tax person answer.

 

I looked at Form 1040 again, and note that the EV tax credit is entered on line 54 and then the sum of all credits are subtracted from line 44. Line 44 is often referred to as 'tax liability.'

So my post #9 should start from line #44, not line #43. Form 1040 does not distinguish between refundable and non-refundable credits but the difference surely exists. Somewhere ;-)

 

Let's use last year's numbers with this year's EV tax credit.

Line 44....... $9,036 (Tax Liability/Does not change based on prepayments)
Line 54........$4,502 (EV Tax Credit)
Line 56/63...$4,534 (Line 44 minus Line 56/Actual tax liability after tax credit)
Line 74........$10,618 (Taxes paid throughout the year/from W2)
Line 75........$ 6084 (Refund amount/Line 74 minus Line 63)

Does that look right? If so, my approach of prepaying less per check still makes sense right? I just get the money each check vs at the end of the year.

 

This is exactly right if your only credit is the EV. You probably just have a typo here, but your
Line 56/63 .... should be (Line 44 minus line 56)

Exactly right about the prepayments.

 

You are right, fixed it! Thanks again for helping us out.

 

Since we are on the topic, will i get the rebate next year if this year my total I paid to feds was like 10k, and my total tax due was 7k, and I got a 3k rebate. If my taxes are the same next year I assume my total tax due will be 2500 with a 7500 rebate?

 

Correct!

#1 in Easley,SC