XP: Any tax pros here?

[lynn07]

We are considering getting another plug in hybrid before the end of the year. We have another EV but bought it used and didn’t have to deal with this part. I want to be sure that I am understanding the tax credit correctly. We receive a refund every year because we over pay (I know, I should fix this, but that’s a discussion for another day). I know that if we get an electric vehicle it reduces our tax liability. Does that mean we would receive more back on our refund? Like if we usually pay 7k to the feds over the year and then get a 5k refund normally, would we actually get 12k back with the ev credit?

[dr.girlfriend]

Nov 26, 2020 13:05:14 GMT -5 lynn07 said:

We are considering getting another plug in hybrid before the end of the year. We have another EV but bought it used and didn’t have to deal with this part. I want to be sure that I am understanding the tax credit correctly. We receive a refund every year because we over pay (I know, I should fix this, but that’s a discussion for another day). I know that if we get an electric vehicle it reduces our tax liability. Does that mean we would receive more back on our refund? Like if we usually pay 7k to the feds over the year and then get a 5k refund normally, would we actually get 12k back with the ev credit?

I am by no means a tax expert, but if it helps that is how our solar tax credit worked.  We never adjusted our withholdings when we should have, so we were overwithholding to begin with, and instead of like an $8k refund we got a $20k refund, $12k of which was 30% back on our solar installation.

[jwright]

The credit is up to 7500 but is limited by the amount of your tax liability. If your federal tax is 4,000 then you only get a 4,000 credit and presumably your refund would increase 4,000. If your tax is 7500 or more then your refund would increase by 7500 assuming you over-withheld as usual.

Also make sure the model you want is still eligible for the credit. I read that it is phased out for all Tesla models for example.