Tax Credit Surprise

Clicker

Well-Known Member
First Name
Jerry
Joined
Jun 20, 2021
Threads
16
Messages
111
Reaction score
212
Location
Zephyrhills, Florida
Vehicles
Mustang Mach e
Occupation
Retired
Country flag
So in doing my 2021 Turbo Tax Home and Business return I got a disappointing surprise. Apparently the credit is only good for income tax owed and does not apply to the self employment (social security) portion of the taxes you owe. Turbo Tax said I was eligible for a $7500 credit but it actually deducted $683 from income tax owed. No effect on self employment tax. What a bummer that was to find out. For those of you who have this situation sorry to be the bearer of bad news.
Sponsored

 
  • Like
Reactions: ckt

RickMachE

Well-Known Member
Joined
Jul 1, 2021
Threads
200
Messages
13,121
Reaction score
17,835
Location
SE MI
Vehicles
2022 Mach-E Premium 4X, 2022 Lightning Lariat
Country flag
Yes, that's correct. Social Security and Medicare taxes paid by the self-employed are tallied via the 1040, but they are not "income taxes".

For those thinking of buying an EV in 2022, it's always a good idea to carefully examine your prior year's tax return, understand your current year, and consulting your tax professional if you have one.
 

ChuckA

Well-Known Member
First Name
Chuck
Joined
Jul 3, 2021
Threads
29
Messages
1,486
Reaction score
1,050
Location
North Branford, CT
Vehicles
ā€˜21 MME Premium AWD ER in Infinite Blue
Occupation
Accountant-Retired
Country flag
Yes, that's correct. Social Security and Medicare taxes paid by the self-employed are tallied via the 1040, but they are not "income taxes".

For those thinking of buying an EV in 2022, it's always a good idea to carefully examine your prior year's tax return, understand your current year, and consulting your tax professional if you have one.
If your 2021 tax return assumes you are making an IRA contribution for 2021, put it instead into a Roth IRA as this will increase your 2021 tax liability.

Of course if thatā€™s not the case, itā€™s too late to do a 2021 Roth IRA conversion, which wouldā€™ve also increased the 2021 tax liability.
 


Caramel Mach-e-ato

Well-Known Member
First Name
Brian
Joined
Jan 29, 2022
Threads
0
Messages
177
Reaction score
159
Location
North Carolina
Vehicles
Mach E GT
Country flag
The tax credit is not refundable. It applies only to your income tax liability. If you owe >$7500 in taxes, you get the full credit. If you owe less, say $5k, you only get $5k.

If BBB goes through, then the legislative drafts indicate that the credit becomes refundable - and places limits on the amount of the car that it applies to. Of course that assumes that the house and senate drafts continue to agree on this. The draft I have seen indicates a retroactive date to the implementation. Not trying to get political, but rather demonstrate that legislation is not final until POTUS signs it.
 

Scooby24

Well-Known Member
First Name
Greg
Joined
Jul 2, 2021
Threads
24
Messages
1,897
Reaction score
2,871
Location
Olathe, KS
Vehicles
'21 MME-GT Star White; '22 MME Prem AWD DGM
Occupation
Perioperative Revenue Manager
Country flag
Uh pretty much no tax credit or deduction ever has applied to social security tax (I say pretty much because I realize there are exceptions to everything in the tax code). Not sure why you expected this to be any different.
Alright guys, when someone posts a thread like this as a heads up, it's information that might be beneficial to someone. There's absolutely no good that comes from chastising OP for something like this.
 

Ride_the_lightning

Well-Known Member
Joined
Jul 11, 2021
Threads
6
Messages
546
Reaction score
1,070
Location
Midwest
Vehicles
Mach E Premium SR AWD
Occupation
Engineer
Country flag
Alright guys, when someone posts a thread like this as a heads up, it's information that might be beneficial to someone. There's absolutely no good that comes from chastising OP for something like this.
Maybe because it was posted to the General Mach E forum? Do you really want this forum filled with posts about general tax advice? Guess what, you also canā€™t apply the credit to a million other unique tax situations that small business owners run into. Thatā€™s what the TurboTax forum is for.
 

Scooby24

Well-Known Member
First Name
Greg
Joined
Jul 2, 2021
Threads
24
Messages
1,897
Reaction score
2,871
Location
Olathe, KS
Vehicles
'21 MME-GT Star White; '22 MME Prem AWD DGM
Occupation
Perioperative Revenue Manager
Country flag
Maybe because it was posted to the General Mach E forum? Do you really want this forum filled with posts about general tax advice? Guess what, you also canā€™t apply the credit to a million other unique tax situations that small business owners run into. Thatā€™s what the TurboTax forum is for.
So you think by being a dick to OP you're going to accomplish what?
 

Ride_the_lightning

Well-Known Member
Joined
Jul 11, 2021
Threads
6
Messages
546
Reaction score
1,070
Location
Midwest
Vehicles
Mach E Premium SR AWD
Occupation
Engineer
Country flag
So you think by being a dick to OP you're going to accomplish what?
Iā€™m not sure I was any more rude than 100+ other posts telling people to ā€œread the manualā€ or that they shouldnā€™t be surprised by cold weather range. Those are at least car related and I agree we shouldnā€™t be rude to people about things like that.

However, as a small business owner myself, I donā€™t have much patience for others that think they are smart enough to handle their taxes themselves, then post things indicating they donā€™t understand the basics of tax decisions. Iā€™m not an accountant, which is why I pay one, but understanding the difference between self employment tax and income tax is pretty basic stuff that any business owner savvy enough to get away with using TurboTax should understand. OP should have hired an accountant and asked them prior to making a $7500 business decision.
 

Scooby24

Well-Known Member
First Name
Greg
Joined
Jul 2, 2021
Threads
24
Messages
1,897
Reaction score
2,871
Location
Olathe, KS
Vehicles
'21 MME-GT Star White; '22 MME Prem AWD DGM
Occupation
Perioperative Revenue Manager
Country flag
Iā€™m not sure I was any more rude than 100+ other posts telling people to ā€œread the manualā€ or that they shouldnā€™t be surprised by cold weather range. Those are at least car related and I agree we shouldnā€™t be rude to people about things like that.

However, as a small business owner myself, I donā€™t have much patience for others that think they are smart enough to handle their taxes themselves, then post things indicating they donā€™t understand the basics of tax decisions. Iā€™m not an accountant, which is why I pay one, but understanding the difference between self employment tax and income tax is pretty basic stuff that any business owner savvy enough to get away with using TurboTax should understand. OP should have hired an accountant and asked them prior to making a $7500 business decision.
If someone is whining or complaining, making accusations, blaming ford, or a dealer, or whatever else as a result of them shifting blame for their own lack of education....that's one thing and worthy of correction.

In this case, OP made a mistake. He shared the mistake he made. He didn't blame anyone and his mistake could be seen by someone that would benefit.

There's no reason to be rude to him, at all. That's the difference as I see it.

Regarding not having patience for others that think they are smart enough to do their own taxes....We've all tried something that was a bit over our head and made mistakes. Every single one of us.
 

Ride_the_lightning

Well-Known Member
Joined
Jul 11, 2021
Threads
6
Messages
546
Reaction score
1,070
Location
Midwest
Vehicles
Mach E Premium SR AWD
Occupation
Engineer
Country flag
If someone is whining or complaining, making accusations, blaming ford, or a dealer, or whatever else as a result of them shifting blame for their own lack of education....that's one thing and worthy of correction.

In this case, OP made a mistake. He shared the mistake he made. He didn't blame anyone and his mistake could be seen by someone that would benefit.

There's no reason to be rude to him, at all. That's the difference as I see it.

Regarding not having patience for others that think they are smart enough to do their own taxes....We've all tried something that was a bit over our head and made mistakes. Every single one of us.
Ok fair enough. I admit I was harsher than I needed to be. Both things can be true: I was too rude to OP, but still think we need a separate forum for tax credit related posts. I come here to talk about cars, not peopleā€™s 1040.

Edit: turns out there is a separate forum for that already. Win-win!
 

Cm12

Well-Known Member
First Name
Chris
Joined
Oct 25, 2021
Threads
3
Messages
291
Reaction score
460
Location
Oregon
Vehicles
2021 Mach E Premium
Country flag
If someone is whining or complaining, making accusations, blaming ford, or a dealer, or whatever else as a result of them shifting blame for their own lack of education....that's one thing and worthy of correction.

In this case, OP made a mistake. He shared the mistake he made. He didn't blame anyone and his mistake could be seen by someone that would benefit.

There's no reason to be rude to him, at all. That's the difference as I see it.

Regarding not having patience for others that think they are smart enough to do their own taxes....We've all tried something that was a bit over our head and made mistakes. Every single one of us.
Exactly. Someone may never have even considered a Roth conversion as an option (and a very good option, by the way). Iā€™m pretty competent when it comes to the law and my own personal taxes, so I donā€™t need a tax professional. I donā€™t know a dang thing about IT stuff, however, and have learned a lot on these forums from the various postersā€¦sometimes through their unfortunate errors. I appreciate them letting me learn from their mistakes, rather than making them myself.

OPā€™s situation brings a potential problem to light and some posters have offered a potential solution. Insulting people, especially when theyā€™re already down, makes people not want to be a part of this community. Especially when their misfortune is caused by a lack of understanding of one of the most complicated areas of law, one that routinely confuses experienced attorneys.
Sponsored

 
 




Top