Happy to pay $900 Fed tax

South Carolina gave a $1199 non-refundable tax credit that can be transferred up to 5 years. Only thing is, the credit expired 12/31/2016 for up to the 2016 tax year. I got mine all for the 2016 tax year. I got refunds for both federal and state because of the tax credits. Basically got my money back that was withheld throughout the year.

#1 in Easley,SC

 

I'm not an expert either, but my understanding is that it will reduce your tax liability. Meaning that if you have a liability of 5000, which would be reduced to 500 and you paid in 4000, refund would be 3500.

 

If you want to break even and not get a tax refund when you know you have the tax credit coming, you can raise your exemptions throughout the year and not get a refund. When you have a non-refundable tax credit, the amount of your credit is what your tax liability is for that your up to the full amount of the credit if your liability goes up to the full credit amount. You won't getting a check for the remaining amount of your tax credit if say your liability for the year is only $3500 for federal. You would only get a tax credit for $3500. If you tax liability is at or above $4500, then your tax liability will be covered up to $4500. Whatever you have withdrawn from your check throughout the year that would have gone to your tax liability would be refunded back to you as your tax refund.

#1 in Easley,SC

 

bob, did you get a credit on the i-3?

 

Haven't seen a tax refund ever since I got married (marriage tax anyone?).

Hoping to see one this year

 

gotcha, but wasn't there also a credit on the i-3, or can you only take one car?

 

My understanding is, it's not deducted from your total tax after all deductions. It's deducted from what you owe before you take your deductions. It ends up being part of your deductions.

 

That's what I understand. Got to be careful not to lower your taxable income to the point to where it reduces your tax liability below $4500.

#1 in Easley,SC

 

Like I said, I'm not an expert.

 

That's fine. That's why we give each other info to get each of us educated.

#1 in Easley,SC

 

I thought he bought the I-3 used, isn't it only on new ones?

 

good point, thank you.

 

Are you talking about estimated tax withholding from your paycheck? My understanding has been that this has nothing to do with these non-refundable tax credits. Lowering withholding by raising paycheck exemptions has no impact on the final tax bill, provided you don't mess up and get into under-withholding penalty territory.

Or am I misreading something?

 

Your tax liability at the end of the year will have to be covered by either from your withholdings during the year or your anticipated tax credit you will get at the end of the year because of your purchase of a qualified vehicle for your tax credit. If you plan on getting your tax credit to cover $4500 of your tax liability, it isn't necessary to have that $4500 taken out of your checks throughout the year. If you do have it taken out throughout the year, you will get it right back at the end of the year because $4500 of your tax liability is already going too be covered by your tax credit you will get at the time you file for this year's taxes. You will get the credits either way. Just depends if you want Uncle Sam to hold on to your own money that you will get back at the end of the year throughout the year or if you rather keep that money now.

#1 in Easley,SC

 

If you don't trust the government in giving you the tax credit by the end of the year and want to make sure you are covered for your tax liability anyway, just leave your withholdings alone and get your refund at the end of the year when you know for sure you have the tax credit. I ended up getting a refund of my withholdings at the end of the year because throughout the year I wasn't anticipating in buying my Prime last year which would have given me my tax credit for last year. But I did buy one in December and got $4500 of my withholdings back as a refund. I had a month to make adjustments and to make sure that I had my tax liability for the year was at least $4500 to get the full credit applied to my tax liability. Which I was able to do so.

#1 in Easley,SC