No Tax Credit for my loaded GTPE?

[Blue highway]

We will see how the specific language comes out. FWIW the Oregon rebate is capped based on the actual sticker as optioned. I’d bet on the same handling with the new fed rebate if/when it passes.

For perspective I don’t think the current federal tax credit is going to write me a check when I do my taxes. It’s a non-refundable credit which as I understand it means that it is good for up to 7500 if that is my liability at the end of the year. If I owe say 3500 that is all the credit is good for.

From car and driver:

It is important to note that the credits are non-refundable tax credits, as opposed to refundable tax credits. That means that the credits can only be applied to the taxes you owe in a given year, and if you received more in credits than you owe in taxes, you will not receive the difference in the form of a check. (With refundable tax credits, you would receive that check). Additionally, since the credits don’t roll over, you can only apply the credits to your taxes for one tax year.

Keep in mind that you cannot qualify for the credits if you lease the vehicle because you don’t own it— the manufacturer does. In that case, the manufacturer can qualify for and receive the credit; the credit is often figured into the price of the lease, so you receive the benefit indirectly.

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[kennethjk]

For perspective I don’t think the current federal tax credit is going to write me a check when I do my taxes. It’s a non-refundable credit which as I understand it means that it is good for up to 7500 if that is my liability at the end of the year. If I owe say 3500 that is all the credit is good for.

From car and driver:

It is important to note that the credits are non-refundable tax credits, as opposed to refundable tax credits. That means that the credits can only be applied to the taxes you owe in a given year, and if you received more in credits than you owe in taxes, you will not receive the difference in the form of a check. (With refundable tax credits, you would receive that check). Additionally, since the credits don’t roll over, you can only apply the credits to your taxes for one tax year.

Keep in mind that you cannot qualify for the credits if you lease the vehicle because you don’t own it— the manufacturer does. In that case, the manufacturer can qualify for and receive the credit; the credit is often figured into the price of the lease, so you receive the benefit indirectly.

To clarify when you say owe, do you mean owe after fed tax withholdings or estimated tax payments or tax liability before tax withholding?

 

[Mach1E]

We will see how the specific language comes out. FWIW the Oregon rebate is capped based on the actual sticker as optioned. I’d bet on the same handling with the new fed rebate if/when it passes.

Anything is technically possible, but in the scenario above, Ford would just lower MSRP a few hundred bucks.

They aren’t going to torpedo GTPE sales over a few hundred bucks and cause customers to lose $7500.

Bottom line? Don’t change your plans based on what the government may or may not do. If In the unlikely scenario that they use optioned up MSRP and Ford does nothing…….. then change your plans.

 

[ARK]

To clarify when you say owe, do you mean owe after fed tax withholdings or estimated tax payments or tax liability before tax withholding?

When you file taxes each year, you compute how much you owe the federal government. You also compute how much you have already paid them throughout the year. Suppose your first calculation shows you owe the feds $10,000 for the year. If it turns out you have paid them $11,000 in taxes throughout the year, you get a refund for $1,000. If it turns out you have paid them only $9,500 in taxes, you have to write a check to them for $500.

The current tax credit law doesn’t care about how much you have withheld throughout the year. It cares about what your total tax bill was for the year. So going with the above examples. Say you had paid $11,000 in taxes when you only owed $10,000. Now, if you qualify for the tax credit, instead of a $1,000 refund, you get $8,500 back.

Instead say you had underpaid and had only paid $9,500 when you owed $10,000 for the year. If you qualify for the tax credit, your check will only be for $7,000 because you owe the feds $500 in unpaid taxes with this example.

Only if your total tax liability for the year is less than $7,500 do you forfeit part of the credit under the current rules. I think the proposal for the new tax law is to make it so you can carry the unused portion forward for up to five years, but there aren’t many nitty gritty details available yet.

 

[Blue highway]

To clarify when you say owe, do you mean owe after fed tax withholdings or estimated tax payments or tax liability before tax withholding?

Good questions ? based on some googling I understand this to mean owe after federal withholding. If it was before withholding it would cap out at a fairly low income. If someone on the thread has gone through the process from an earlier EV purchase maybe they can clarify.

 

[Mach1E]

Good questions ? based on some googling I understand this to mean owe after federal withholding. If it was before withholding it would cap out at a fairly low income. If someone on the thread has gone through the process from an earlier EV purchase maybe they can clarify. Either way it may offset some tax liability but the IRS is not going mail me a 7500 check. It’s a non-refundable credit.

They will mail you a $7500 check if your withholding exactly equaled your tax liability before the BEV credit……. as long as your total tax liability is more than $7500.

The last line is the most important part. Ignore withholding. What you withhold has nothing to do with the actual credit.

Here is a detailed explanation:
https://www.caranddriver.com/shopping-advice/amp32586259/how-ev-tax-credits-work/

“It is important to note that the credits are non-refundable tax credits, as opposed to refundable tax credits. That means that the credits can only be applied to the taxes you owe in a given year, and if you received more in credits than you owe in taxes, you will not receive the difference in the form of a check. (With refundable tax credits, you would receive that check). Additionally, since the credits don’t roll over, you can only apply the credits to your taxes for one tax year.”

 

[Maquis]

I'm going to disagree with the consensus here. I believe the MSRP limits will be the total MSRP, not the base price. If it were only the base MSRP, it would be too easy to game the system - the manufacturer could simply lower the base price and throw more money into options. Heck, Ford could structure GTPE pricing to use the plain MME base and add $35K for the "GTPE Package". Every Mach-E could have the same base MSRP regardless of how it was built!

No EV sold in the US would have a base MSRP over the limit. "Porsche Taycan...base MSRP $54,500....options $80,000". ?

JMHO....

 

[kennethjk]

When you file taxes each year, you compute how much you owe the federal government. You also compute how much you have already paid them throughout the year. Suppose your first calculation shows you owe the feds $10,000 for the year. If it turns out you have paid them $11,000 in taxes throughout the year, you get a refund for $1,000. If it turns out you have paid them only $9,500 in taxes, you have to write a check to them for $500.

The current tax credit law doesn’t care about how much you have withheld throughout the year. It cares about what your total tax bill was for the year. So going with the above examples. Say you had paid $11,000 in taxes when you only owed $10,000. Now, if you qualify for the tax credit, instead of a $1,000 refund, you get $8,500 back.

Instead say you had underpaid and had only paid $9,500 when you owed $10,000 for the year. If you qualify for the tax credit, your check will only be for $7,000 because you owe the feds $500 in unpaid taxes with this example.

Only if your total tax liability for the year is less than $7,500 do you forfeit part of the credit under the current rules. I think the proposal for the new tax law is to make it so you can carry the unused portion forward for up to five years, but there aren’t many nitty gritty details available yet.

the way some people have written that if their liability at the end of the year is less than 7500 they cannot get the full credit of 7500

”It’s a non-refundable credit which as I understand it means that it is good for up to 7500 if that is my liability at the end of the year. If I owe say 3500 that is all the credit is good for”

to clarify “ the liability at the end of the year“ is before withholding and estimated tax payments.

so if fed tax amount is 7,700 and withholding is 8,000 leaving a refund of 300 before tax credit, you would still be entitled to 7500 credit and get refund of 7,800.

 

[kennethjk]

They will mail you a $7500 check if your withholding exactly equaled your tax liability before the BEV credit……. as long as your total tax liability is more than $7500.

The last line is the most important part.

Correct

 

[kennethjk]

Good questions ? based on some googling I understand this to mean owe after federal withholding. If it was before withholding it would cap out at a fairly low income. If someone on the thread has gone through the process from an earlier EV purchase maybe they can clarify. Either way it may offset some tax liability but the IRS is not going mail me a 7500 check. It’s a non-refundable credit.

Usually these things are before withholding, when they say it’s not a refundable tax credit they mean if the credit is more than your tax liability before withholding you can get the money back

 

[Mach1E]

Usually these things are before withholding, when they say it’s not a refundable tax credit they mean if the credit is more than your tax liability before withholding you can get the money back

Just ignore withholding. I think that is confusing people.

You could withhold zero dollars (self employed) or withhold 100% of your pay check and it would have zero impact on the tax credit.

 

[kennethjk]

Just ignore withholding. I think that is confusing people.

You could withhold zero dollars (self employed) or withhold 100% of your pay check and it would have zero impact on the tax credit.

You are Correct. The way some write this stuff is misleading

 

[ARK]

the way some people have written that if their liability at the end of the year is less than 7500 they cannot get the full credit of 7500

”It’s a non-refundable credit which as I understand it means that it is good for up to 7500 if that is my liability at the end of the year. If I owe say 3500 that is all the credit is good for”

to clarify “ the liability at the end of the year“ is before withholding and estimated tax payments.

so if fed tax amount is 7,700 and withholding is 8,000 leaving a refund of 300 before tax credit, you would still be entitled to 7500 credit and get refund of 7,800.

That’s correct, non-refundable here means if your tax liability for the year is less than $7,500, before looking at what you did in terms of withholding, is when you lose part of the credit.

It certainly is refundable in the sense that the IRS will send you a check if you owed at least $7,500 in taxes for the year.

But if for example you are retired and had $0 income for the year and therefore owe $0 in taxes for the year and had $0 in withholding because there is nothing to withhold, the government won’t cut you a check.

 

[kennethjk]

That’s correct, non-refundable here means if your tax liability for the year is less than $7,500, before looking at what you did in terms of withholding, is when you lose part of the credit.

It certainly is refundable in the sense that the IRS will send you a check if you owed at least $7,500 in taxes for the year.

But if for example you are retired and had $0 income for the year and therefore owe $0 in taxes for the year and had $0 in withholding because there is nothing to withhold, the government won’t cut you a check.

Correct again.

 

[veronicablack]

A lot of people here are discussing msrp or final price but, not to cause a panic, I don’t think the MME at any trim is considered a suv in the first place. Fueleconomy.gov calls it a small station wagon which falls under the car category and not the suv category. This could affect a lot more than just people wanting a pano roof.

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