knightmb
Posts: 941
Joined: Mon Jan 12, 2015 7:41 pm
Delivery Date: 26 Feb 2021
Leaf Number: 306291
Location: Franklin, TN

Re: New 2020 Leaf SV 40kw with Technology & All-Weather

Fri Apr 30, 2021 6:57 am

EV Tax Credits are non-refundable tax credits that come from buying a vehicle with a battery propulsion system that can draws power from an external power source. The credits are available for both pure electric vehicles and plug in hybrids. The credits earned depend on a variety of factors and are used to decrease taxes you owed in a given year. For instance, if you bought an EV eligible for a $7500 tax credit and your total federal taxes for the year came to $8500, you would owe only $1000 to the government.
I can't remember what it was back in 2013, I think you needed have over $47,000 per person to get the full $7,500. It is easy to inflate your income with the IRS *legally* and produce more tax liability, but the IRS doesn't require anyone to reduce tax liability to owe less since there is an nearly unlimited number of loopholes to do that and one can't know all of them. The point I was making, if you earn less than the maximum needed, you could basically zero out your withholding (keeping the money basically) and inflating your income; come tax time legally. Basically, you get the full $7500 without having to make the income level that would technically support it. Basically another accounting loophole.
Last edited by knightmb on Fri Apr 30, 2021 9:45 am, edited 1 time in total.
2020 Leaf SL Plus - (Manufacture Date March 2020)
2013 Leaf SV (8 faithful years of service before trade in at 75,679 miles)

SageBrush
Forum Supporter
Posts: 6265
Joined: Sun Mar 06, 2011 2:28 am
Delivery Date: 13 Feb 2017
Location: NM

Re: New 2020 Leaf SV 40kw with Technology & All-Weather

Fri Apr 30, 2021 7:56 am

jjeff wrote:
Fri Apr 30, 2021 4:22 am
SageBrush wrote:
Thu Apr 29, 2021 4:50 pm
knightmb wrote:
Tue Mar 09, 2021 11:18 pm
You would basically just want to skip the tax withholding for the year to pocket the extra cash and hope you rack up enough for the $7500 to eat into it for tax time next year.
Tax withholdings do not affect the $7,500 tax credit eligibility
Correct, you can increase your liability by doing things like not adding to your 401k that year but changing withholding will have no effect on your liability. I'm no tax expert but is there anything that can be easily be done to temporarily increase liability for a year to take full advantage of the credit?
Sure. Work more ;)
Joking aside, increase your taxable income however you want. Perhaps save in Roth instead of IRA ?

This all gets more tricky if you pay for Obamacare.
2013 LEAF 'S' Model with QC & rear-view camera
Bought Jan 2017 from N. California
Two years in Colorado, now in NM
03/18: 58 Ahr, 28k miles
11/18: 56.16 Ahr, 30k miles
09/20: 54.3 Ahr; 38k miles
-----
2018 Tesla Model 3 LR, Delivered 6/2018

SageBrush
Forum Supporter
Posts: 6265
Joined: Sun Mar 06, 2011 2:28 am
Delivery Date: 13 Feb 2017
Location: NM

Re: New 2020 Leaf SV 40kw with Technology & All-Weather

Fri Apr 30, 2021 9:23 am

knightmb wrote:
Fri Apr 30, 2021 6:57 am
The point I was making, if you earn less than the maximum needed, you could basically zero out your withholding (keeping the money basically) and inflating your income come tax time legally. Basically, you get the full $7500 without having to make the income level that would technically support it. Basically another accounting loophole.
Same assertion, still wrong.

You are confusing tax liability after other tax credits, with tax owed.** The latter is affected by pre-payments but tax liability is not. Prior to considering the EV tax credit, if you tax liability (line 16 on Form 1040) is $7,500, you get the full EV tax credit. Or put another way, the EV tax credit will reduce your tax liability by up to $7,500.

Example:
110k income
24k deductions
3k other tax credits
7.5 EV tax credit
5k tax pre-payments

Say the income tax liability on 86k is 10k (I'm just guessing)
That is reduced to 7k by the other 3k tax credits
The EV tax credit reduces your owed tax to 0k
Your pre-payments result in 5k returned to you.

**
You also appear to think that tax with-holding affects taxable income. It does not.
Last edited by SageBrush on Fri Apr 30, 2021 12:34 pm, edited 1 time in total.
2013 LEAF 'S' Model with QC & rear-view camera
Bought Jan 2017 from N. California
Two years in Colorado, now in NM
03/18: 58 Ahr, 28k miles
11/18: 56.16 Ahr, 30k miles
09/20: 54.3 Ahr; 38k miles
-----
2018 Tesla Model 3 LR, Delivered 6/2018

knightmb
Posts: 941
Joined: Mon Jan 12, 2015 7:41 pm
Delivery Date: 26 Feb 2021
Leaf Number: 306291
Location: Franklin, TN

Re: New 2020 Leaf SV 40kw with Technology & All-Weather

Fri Apr 30, 2021 9:55 am

SageBrush wrote:
Fri Apr 30, 2021 9:23 am
You also appear to think that tax with-holding affects taxable income. It does not.
That's why I hate taxes :lol:
I know it doesn't affect it, it only affects how much you pay to the government in the event that the amount of withholding was not enough to cover how much you owe. I was referring to keeping the money early instead of getting it back at tax time. That's all that trick does. :mrgreen:

If you made (for example), $47,000 in 2013 and the tax bracket said you owed $7,500 and you didn't pay any withholding that year and decided not to do any deductions (hypothetical of course), you would owe the IRS $7,500. The EV tax credit would apply to this and thus, you would owe the IRS $0. The problem was, if people didn't make enough income, they couldn't use the whole $7,500. So if you made $30k that year and only owed $5,000 (example) in tax, the credit would only pay the $5,000 and the IRS would NOT give you an extra $2,500 to make up the difference. The only reason I've encountered it so much was because of myself and friends/family that bought a new Leaf and had the same issue, not enough tax debt to use the whole credit. So the tax accountants had to get creative. :D
2020 Leaf SL Plus - (Manufacture Date March 2020)
2013 Leaf SV (8 faithful years of service before trade in at 75,679 miles)

SageBrush
Forum Supporter
Posts: 6265
Joined: Sun Mar 06, 2011 2:28 am
Delivery Date: 13 Feb 2017
Location: NM

Re: New 2020 Leaf SV 40kw with Technology & All-Weather

Fri Apr 30, 2021 12:12 pm

knightmb wrote:
Fri Apr 30, 2021 9:55 am
I was referring to keeping the money early instead of getting it back at tax time. That's all that trick does. :mrgreen:
Agreed
2013 LEAF 'S' Model with QC & rear-view camera
Bought Jan 2017 from N. California
Two years in Colorado, now in NM
03/18: 58 Ahr, 28k miles
11/18: 56.16 Ahr, 30k miles
09/20: 54.3 Ahr; 38k miles
-----
2018 Tesla Model 3 LR, Delivered 6/2018

knightmb
Posts: 941
Joined: Mon Jan 12, 2015 7:41 pm
Delivery Date: 26 Feb 2021
Leaf Number: 306291
Location: Franklin, TN

Re: New 2020 Leaf SV 40kw with Technology & All-Weather

Fri Apr 30, 2021 12:31 pm

SageBrush wrote:
Fri Apr 30, 2021 12:12 pm
knightmb wrote:
Fri Apr 30, 2021 9:55 am
I was referring to keeping the money early instead of getting it back at tax time. That's all that trick does. :mrgreen:
Agreed
I didn't want to hijack the topic with tax talk :lol:
2020 Leaf SL Plus - (Manufacture Date March 2020)
2013 Leaf SV (8 faithful years of service before trade in at 75,679 miles)

Return to “New Members & Newbie Questions”