Prime tax credit

So in what cases, generally speaking, someone won't' qualify for the fully $4502? what can prevent you, in general, from receiving the full amount - some examples: high income? high mortgage? high other deductions? not having a refund due at all? high tax bracket? or too low bracket? what's a "general rule of thumb"?

 

You have to have a total tax liability of $4,502 or higher for the credit to offset it. The $4,502 credit cannot be carried forward if you don't use it all.

Look at the line items on your previous return to see what order things are taken in and it will help. Or it will make it MUCH harder.

It's difficult to make a lot of generalized statements about the situations because there are so many special situations out there, BUT one thing is absolute. You have to have a total tax liability of $4,502 or higher for the credit to offset it.

 

Looking on the 2016 tax table (page 82) a single person would need at least $33100 of taxable income on line 43 to use the entire credit.

 

I forgot to mention there are also free tax websites that you can use for the calculation, where you can easily do all kinds of "what if" scenarios. I went to the IRS website and they have a list of them, I picked the first one on the list FreeTaxUSA

Playing around with it I came up with the minimum scenario (using 2016 tax rates) for getting the full credit, which turns out to be $43,450 income with standard deduction, no dependents and no other credits, which results in a tax liability of $4,505.

Single, no dependents
Line 37: Adjusted Gross Income = 43,450
Line 40: Standard Deduction = 6,300
Line 42: Standard Exemption = 4,050
Line 43: Taxable Income = 33,100
Line 44: Tax = 4,505
Line 54: Other credits = 4,502
Line 63: Total Tax = 3

Without the plug-in credit, whatever you had withheld during the year less $4,505 would be your refund amount (or amount owed). But in this case whatever you had withheld during the year less $3 is your refund. So you are getting the full benefit of the $4,502 credit.

Lower income, deductions beyond the standard, and other credits will have an effect. I will give just one more example, a scenario with a higher income than the previous example, but with one dependent and itemized deductions, causing that you only get $3,575 of the credit applied.

Single, one dependent
Line 37: Adjusted Gross Income = 50,000
Line 40: Itemized Deductions = 15,000
Line 42: Exemption = 8,100
Line 43: Taxable Income = 26,900
Line 44: Tax = 3,575
Line 54: Other credits = 4,502

Line 56 is the kicker, if your credit(s) are higher than your tax, then the tax owed is 0, not negative

Line 63: Total Tax = 0

Without the credit, whatever you had withheld during the year minus $3,575 would be your refund amount (or amount owed). In this case whatever you had withheld during the year is your refund. Which means that only $3,575 of the credit actually benefited you.

 

California has a limit of two credits and also a maximum income test.

 

Can someone please help me with this? I am about to buy a prius prime advanced 2017 model for about 28k. The car has 59 miles on it and was built in Nov 2017. If I buy this car in 2018, will I still be getting tax credit? Based on what I know, I would say yes but I want to be sure. Can someone please help? Thanks.

 

welcome!
yes, doesn't matter what year it is. it's what year you put it into service, then you take the credit for that year, the following april. as long as it has never been registered previously.

all the best!