Can someone explain EV tax credits like I’m 5?

[lynn07]

I am far from a tax pro and could use some help figuring this out. There is a chance we will have to buy a new car this year, and we want to get a PHEV that we know qualifies for the full $7500 federal tax credit. I have read through what previous posts I could find, but I can’t for the life of me figure out if we would qualify for the full amount. I looked through our 2022 taxes and some of the lines people said to look at, but I’m still not clear if it means we would qualify or not. Let’s say line 24 has $9000 on it (which would include self employment taxes), would we qualify for the full amount? We owed a good amount ($5k) on taxes last year due to freelance work my DH does in addition to his full time job. We also claim a child tax credit. Also, what should I look at to see if we qualify for the state tax credit?

We already have had EV’s, but we bought them used years ago, long before any sort of credit was offered on used ones. I don’t know why, but this is so confusing to me. Thank you for any help you can give!

[Poppy]

It is complicated, unfortunately.

This is a list of all the cars that qualify for the federal credit so far: www.nerdwallet.com/article/taxes/ev-tax-credit-electric-vehicle-tax-credit
Halfway down there is a table that lists the credits for each car.

My understanding is that as long as your tax liability (aka the total taxes you owe including what is withheld throughout the year + what you owe at tax time) is in excess of your credits, you will be able to get the whole amount. This a simplification so hopefully someone can help me fact check.

I think you're in CO and that $5k one has very few strings attached! There are additional credits for low income people. We are waiting on our Bolt to be built right now. The Bolt is by far the best value for a basic EV after the credits right now. But if you need a bigger car, there are many other options, though they're significantly more expensive. What kind of car are you looking for?

[lynn07]

Sept 10, 2023 17:36:43 GMT -5 Poppy said:

It is complicated, unfortunately.

This is a list of all the cars that qualify for the federal credit so far: www.nerdwallet.com/article/taxes/ev-tax-credit-electric-vehicle-tax-credit
Halfway down there is a table that lists the credits for each car.

My understanding is that as long as your tax liability (aka the total taxes you owe including what is withheld throughout the year + what you owe at tax time) is in excess of your credits, you will be able to get the whole amount. This a simplification so hopefully someone can help me fact check.

I think you're in CO and that $5k one has very few strings attached! There are additional credits for low income people. We are waiting on our Bolt to be built right now. The Bolt is by far the best value for a basic EV after the credits right now. But if you need a bigger car, there are many other options, though they're significantly more expensive. What kind of car are you looking for?

We are in CO, so it’s good to hear that there aren’t many strings attached to that one! Do you know if they’ll do that one as a refund? I feel like we never owe very many CO taxes?

The cars we are looking at will be expensive, unfortunately. There is a good chance our van we just lost will be totaled, so we need something to replace that. So either another PHEV van, or a PHEV 3 row SUV (Kia Sorento). Cars are so much more expensive than when we bought our last one!

[Poppy]

Sept 10, 2023 18:11:23 GMT -5 lynn07 said:

Sept 10, 2023 17:36:43 GMT -5 Poppy said:

It is complicated, unfortunately.

This is a list of all the cars that qualify for the federal credit so far: www.nerdwallet.com/article/taxes/ev-tax-credit-electric-vehicle-tax-credit
Halfway down there is a table that lists the credits for each car.

My understanding is that as long as your tax liability (aka the total taxes you owe including what is withheld throughout the year + what you owe at tax time) is in excess of your credits, you will be able to get the whole amount. This a simplification so hopefully someone can help me fact check.

I think you're in CO and that $5k one has very few strings attached! There are additional credits for low income people. We are waiting on our Bolt to be built right now. The Bolt is by far the best value for a basic EV after the credits right now. But if you need a bigger car, there are many other options, though they're significantly more expensive. What kind of car are you looking for?

We are in CO, so it’s good to hear that there aren’t many strings attached to that one! Do you know if they’ll do that one as a refund? I feel like we never owe very many CO taxes?

The cars we are looking at will be expensive, unfortunately. There is a good chance our van we just lost will be totaled, so we need something to replace that. So either another PHEV van, or a PHEV 3 row SUV (Kia Sorento). Cars are so much more expensive than when we bought our last one!

Yes, the Colorado credit is refundable! The only requirements are that the MSRP is under $80k and that you are a Colorado taxpayer. If you buy next year, dealers can apply the credit to the sale (this year you have to wait until you file your taxes).

Kias do NOT currently qualify for the federal credit. The Pacifica PHEV qualifies for $7,500, and the Rivian 3rd row (fully EV) qualifies for $3,750.