Tax credit Q

[ooHi-Fioo]

I'm sorry if this is all common knowledge, u looked through the first few pages and didn't see an answer. I don't have a good handle on taxes, I pay Turbotax to know things.

Let's say I make 90k, but with the standard deductions and childcare deductions and such my taxable income is 55k. My federal tax responsibility is, we will say for conversation sake - 6k. Would the mach E be a 6k deduction and then I get back whatever I paid in federal taxes for that year? I understand that it's not a refundable credit so I think that means the best case scenario is it makes my federal tax liability $0...?

Thank you! Hope to be a mach e or lightning owner!

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[jojomontag]

I'm sorry if this is all common knowledge, u looked through the first few pages and didn't see an answer. I don't have a good handle on taxes, I pay Turbotax to know things.

Let's say I make 90k, but with the standard deductions and childcare deductions and such my taxable income is 55k. My federal tax responsibility is, we will say for conversation sake - 6k. Would the mach E be a 6k deduction and then I get back whatever I paid in federal taxes for that year? I understand that it's not a refundable credit so I think that means the best case scenario is it makes my federal tax liability $0...?

Thank you! Hope to be a mach e or lightning owner!

That sounds right. It will cancel out what you owe up to $7500. So if that zeroes out what you owe, you will simply be refunded all the taxes you paid.

 

[TRP]

Correct.........you would get the $6000......NOT the $7500

 

[RickMachE]

If you were in that situation, about to lose $1,500 in tax credit (and you knew this before year end), it would be time to find more income.

Can you get an advance on pay or bonus?

Do you have unrealized taxable gains on investments and this gives you an opportunity to change investments and not owe anything out of pocket?

TurboTax allows you to easily run whatif scenarios.

 

[ARK]

If you were in that situation, about to lose $1,500 in tax credit (and you knew this before year end), it would be time to find more income.

Can you get an advance on pay or bonus?

Do you have unrealized taxable gains on investments and this gives you an opportunity to change investments and not owe anything out of pocket?

TurboTax allows you to easily run whatif scenarios.

Exactly, OR on the flipside, if there was some way for OP to avoid taking some kind of deduction this year and push it into next year.

 

[shutterbug]

Do you have unrealized taxable gains on investments and this gives you an opportunity to change investments and not owe anything out of pocket?

Also if you have a traditional IRA, this would be a good opportunity to convert some of it to Roth.

 

[RickMachE]

That too!

 

[ooHi-Fioo]

Also if you have a traditional IRA, this would be a good opportunity to convert some of it to Roth.

Thank you for this information, this makes sense to maximize the credit. I actually ordered an explorer st but due to some poorly worded information on Ford's part, it looks like I either need to upgrade the package to near mach-e prices or go with a mach-e. My biggest hangup is no towing on the mach-e, for things like a utility trailer for home depot runs. Another topic though...

 

[DYohn]

Thank you for this information, this makes sense to maximize the credit. I actually ordered an explorer st but due to some poorly worded information on Ford's part, it looks like I either need to upgrade the package to near mach-e prices or go with a mach-e. My biggest hangup is no towing on the mach-e, for things like a utility trailer for home depot runs. Another topic though...

If you do a little research you'll find that the only reason a US-spec Mach E is not rated for towing is because it cannot pass the SAE safety requirements while towing. An EU-spec car IS rated for towing, but not because of differences in the vehicle but because of differences in the requirements.

Bottom line is the US Mach E can be fitted with a tow bar and does have the ability to tow a small load, but if you do so and something happens then you are potentially setting yourself up for any number of issues including Ford voiding your warranty, your insurance company terminating your policy and not paying any claims, and potential liability issues if you are in an accident.

 

[dtbaker61]

If you were in that situation, about to lose $1,500 in tax credit (and you knew this before year end), it would be time to find more income.

Can you get an advance on pay or bonus?

Do you have unrealized taxable gains on investments and this gives you an opportunity to change investments and not owe anything out of pocket?

TurboTax allows you to easily run whatif scenarios.

Unused Tax credits usually 'carry over' if you can't apply the full credit to your liability in the year earned. Tax Credits are not 'deductions' against income, they are a credit applied to whatever your actual tax liability is.

Depending what you may have paid in on your w-2 or estimated tax payments you MAY get a refund if you have paid in more than your liability less the credit(s) available. But the Credit is non-refundable... but surplus credit DOES carryover until used up.

At least that's the way it works with Solar tax credit. It is pretty common for people with low income that earn a big tax credit from a big Solar install to carry-over the credit over several years.

 

[Earplug]

EV Tax Credits are not refundable nor can they be rolled over. Use it or loose it.

A Complete Guide to the Electric Vehicle Tax Credit (greenmatters.com)

 

[RickMachE]

EV Tax Credits are not refundable nor can they be rolled over. Use it or loose it.

A Complete Guide to the Electric Vehicle Tax Credit (greenmatters.com)

That is absolutely correct. When we bought our 2010 Fusion Energi, we lost a tiny part of the credit because I didn't plan correctly.

I have on my calendar for early December to do a tax run-through and determine how much I need to either do Roth conversions or selling assets with taxable gains, so as to use the entire credit.

 

[J-orange]

Thank you for this information, this makes sense to maximize the credit. I actually ordered an explorer st but due to some poorly worded information on Ford's part, it looks like I either need to upgrade the package to near mach-e prices or go with a mach-e. My biggest hangup is no towing on the mach-e, for things like a utility trailer for home depot runs. Another topic though...

If you already have a trailer, it would be more cost effective to rent a tow vehicle for the handful of times that you need it in a year. Savings from operating a MME vs Explorer. Just my .02

 

[dtbaker61]

EV Tax Credits are not refundable nor can they be rolled over. Use it or loose it.

A Complete Guide to the Electric Vehicle Tax Credit (greenmatters.com)

https://fas.org/sgp/crs/misc/IF11017.pdf

this 2019 report does confirm no carry forward for Individual tax credit on EV.... bummer, but I have not gone looking to see if anything changed in the 2021 tax code.

 

[Motomax]

Does anyone know if the EV credit come off first before other credits? I’m getting solar this year too and I’m wondering if the solar credit will come off after the EV credit since that one can be carried over?

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