mach-e, tax credit eligibility

[kkgg]

How do you adjust a W2? That’s a statement of your income and withholding.
If you mean you changed your W4 to affect withholding, that has zero effect on your tax liability and eligibility for the credit.

yes sorry, I meant w4. I did not understand your statement.
I am not making any tax payments now(essentially 0), I can see it in my paycheck so I should owe money at the end of year

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[kkgg]

I think I am missing something..

To qualify for the tax credit one should owe 7500 to the government. So I have adjusted my w4 to NOT withheld federal tax credit(so that I owe more than 7500 to government) and claim the ev tax credit while doing 2022 taxes(next year)

am I off-course here..

 

[RonOinAZ]

I think I am missing something..

To qualify for the tax credit one should owe 7500 to the government. So I have adjusted my w4 to NOT withheld federal tax credit(so that I owe more than 7500 to government) and claim the ev tax credit while doing 2022 taxes(next year)

am I off-course here..

It sounds like you're a little off course. The issue here isn't the reconciliation of taxes owed versus payroll withholdings. The issue is purely a matter of the amount of your Federal tax for the year. If you look at line 24 of your 2021 1040 form, you will see what the amount was last year. If your situation hasn't changed in 2022, your 2022 tax obligation with be in the same ballpark. Provide this amount in 2022 is $7500 or more, you will be able to claim full benefit of the Mach-E's Federal tax credit. If it is something less, for example $6000, then you will only be able to claim $6000 of the Federal tax credit.

Whether or not the reconciliation between your total tax and your payroll withholdings results in you having to write a check to the IRS come tax time is not a factor in determining how much of the $7500 Federal tax credit you'll be able to claim. It will be determined strictly by the amount on line 24 of your 1040 form.

I hope this helps make it clear.

 

[kkgg]

It sounds like you're a little off course. The issue here isn't the reconciliation of taxes owed versus payroll withholdings. The issue is purely a matter of the amount of your Federal tax for the year. If you look at line 24 of your 2021 1040 form, you will see what the amount was last year. If your situation hasn't changed in 2022, your 2022 tax obligation with be in the same ballpark. Provide this amount in 2022 is $7500 or more, you will be able to claim full benefit of the Mach-E's Federal tax credit. If it is something less, for example $6000, then you will only be able to claim $6000 of the Federal tax credit.

Whether or not the reconciliation between your total tax and your payroll withholdings results in you having to write a check to the IRS come tax time is not a factor in determining how much of the $7500 Federal tax credit you'll be able to claim. It will be determined strictly by the amount on line 24 of your 1040 form.

I hope this helps make it clear.

Ok. Thanks for the explanation. This info helps. Line 24 is > 7500.
I guess I will take an professional opinion personally too.
Thanks again. What a day

 

[Maquis]

I think I am missing something..

To qualify for the tax credit one should owe 7500 to the government. So I have adjusted my w4 to NOT withheld federal tax credit(so that I owe more than 7500 to government) and claim the ev tax credit while doing 2022 taxes(next year)

am I off-course here..

Think of it this way: Adjusting you W4 changes the portion of what taxes you owe that you still have to pay when you file vs how much is withheld from your pay. The total owed is not affected by W4 info.

 

[RickMachE]

Ok. Thanks for the explanation. This info helps. Line 24 is > 7500.
I guess I will take an professional opinion personally too.
Thanks again. What a day

Turning off withholding is a bad idea if your tax liability is greater than $7,500. Better to consider reducing withholding by $7,500 for the entire year (meaning your second half withholding will be cut by $7,500. Then, for your first 2023 paycheck, make sure to adjust withholding back up.

Of course that can still mean you owe tax when you file, and could even owe a penalty if you under withhold due to poor W4 calculations, or interest, dividend, and capital gains, or freelance income.

Most people fail to properly estimate their taxes each year. Ideally, you want to pay no more during the year than you are required to by law.

https://www.irs.gov/individuals/tax-withholding-estimator

https://www.irs.gov/forms-pubs/about-publication-505

 

[Triggerhappy007]

Ok. Thanks for the explanation. This info helps. Line 24 is > 7500.
I guess I will take an professional opinion personally too.
Thanks again. What a day

That's ok, a lot of people don't understand how the EV tax credit works. But what you're doing is fine. It just means that you don't have to wait until next Spring to get your EV credit. I'm also doing the same thing by adjusting my W4 so I hardly pay any federal taxes on each paycheck until the end of the year.

 

[fpasta]

It will be determined strictly by the amount on line 24 of your 1040 form.

I hope this helps make it clear.

Crystal clear for me. Thank you for this. Me, i will be getting full tax credit. Before reading this, I already knew guessing that i would be getting full tax credit. The Gov't raping me on taxes. LOL.

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