There's always an option to increase your tax liability by doing things like selling an appreciated asset or taking funds out of your 401(k) early. I advise against that second one, but if you have some stocks that have run up, those would be a good option.Well that sucks for me then. :lol: I don't pay enough in taxes to even get close to the full rebate.
One option for a 401k or IRA may be to convert enough to a Roth to cover your $7500 tax liability. One downside to that is you have to wait 5 years and be over 59 1/2 to use your Roth.There's always an option to increase your tax liability by doing things like selling an appreciated asset or taking funds out of your 401(k) early. I advise against that second one, but if you have some stocks that have run up, those would be a good option.
That's another great idea: Roth conversion. That said, though, you can access the money you put into a Roth after 5 years. But you can't touch the interest until 59.5 without penality.One option for a 401k or IRA may be to convert enough to a Roth to cover your $7500 tax liability. One downside to that is you have to wait 5 years and be over 59 1/2 to use your Roth.
I’ve never seen anything to indicate you are limited to one per year. Some indirect evidence can be found on IRS Form 8936 (the form to claim the credit). It contains two (2) columns to claim up to two PHEV credits on the same form. Then it says near the top of Part I:Just to confirm, as an individual are we limited as to how many times to buy a qualified car and get the credit? I assume no more than one per year.
Actually, for once in California, I agree with their rules. I just doesn't make sense for California to be subsidizing a car like a the 4xe that does not get better mileage or have longer range. Of course I would take it if offered but understand why it isn't.I am pretty bummed about the fact that California will not be offering any rebates on PHEV vehicles that don’t meet >30 electric miles as per EPA.
Also for folks who are thinking of purchasing Jeep from out of state may need to pay heed to the Cali rules below.
- Be registered as new in California. Vehicles may not be purchased, leased, or delivered out of state. Purchases/leases must be made via a California purchase or lease contract. Vehicles ordered online and delivered outside of California are not eligible. The seller's address as reflected on the purchase or lease agreement must be in California.
- Have an odometer reading below 7,500 miles at the time of purchase or lease.
- Effective April 6, 2021, the AER requirement for eligible Light-Duty Plug-in Hybrid Electric Vehicles (PHEVs) will be increased to 30 miles EPA (45 miles UDDS).
So if I normally get a refund each year of say $10,000, is it fair to say that next year I will get back an extra $7,500 making my refund $17,500?All - I and putting a deposit down tomorrow for my Wrangler 4xe (it will be replacing my Cherokee Trailhawk), so I have been trolling these forums. I have noticed some confusion and misinformation about the tax credit. I have done it twice now, First for my BMW i3, and then a couple of years ago for my Chevy Bolt that I still have. So I thought I'd give some advice and some hints.
Yes the $7500 tax credit is really $7500, at least for the vast majority of people who are buying a $50k+ car. As long as you owe at least $7500 in tax you can take the full federal tax credit, and that is a full real $7500, which is very different from a deduction which just reduces your income. The easiest way to check is to look at your 2019 tax return and look for the line that says “This Is your total tax“ (it’s line 16 on the 2019 1040). As long as your "total tax" is greater than $7500 you will get the full $7500. For me it's $25k, well above $7500, so I have nothing to worry about. So unless you have a dozen kids or some weird businesses deductions or something odd, most people who are affording a car like a 4xe will have a tax liability well above $7500. (now if it's less than $7500 then you get a credit for whatever it is. if you owe $5000 you can get a $5000 credit, if you don’t owe taxes then you don't get anything). So lets say on a normal year you owe $25k in taxes and have $24k withheld, so you normally pay $1000 (which BTW is what you should do, getting a big refund just means you gave the IRS a year long interest free loan, but that's getting on a tangent). So if you did nothing different, with the $7500 credit you would owe only $17,500 in tax, minus the $24k you had withheld, you would get a $6500 refund instead of owing $1000.
Now none of us are going to get this car until Feb/March next year even if we already put down our deposit, this tax credit will reflect on your 2021 taxes that you pay in early 2022. So no, you cannot take this tax credit on the taxes that you are about to do in a couple of months. So basically, you have to ‘front’ this $7500 for a year before you actually can get the money. But there is a trick you can do that’s fully legal, and that I have done twice. You can change your withholdings so that you get less money withheld from your paycheck during all of 2021 (Form W-4). So this way instead of waiting till early 2022 you could get this money throughout all of 2021. What you do is change your withholding allowances so that you get enough for as many paychecks as you have left for the rest of the year to come fairly close to $7500 by your last paycheck in 2021. For instance, I get paid biweekly, and each withholding allowance is about $50 to me (yours may be very different, there are withholding calculators on the IRS website). So let's say I get my car March 1st, which leaves me about 20 biweekly paychecks left. $7500/20=$375. So to be a little conservative I will probably Add 6 to my withholding (The more allowances you claim on your form W-4, the less income tax will be withheld from each paycheck) which will give me roughly $300 more per paycheck. Now very important, if you do this you absolutely have to remember to reduce your withholdings back down at the beginning of the next year, 2022 in this case!!! (Otherwise you might find yourself with a huge bill and possible penalties in early 2023)
Hope that helps some. – John
PS - If you're looking for a good level 2 charger look at Clipper Creek. They make excellent chargers that are significantly cheaper than buying a charger through a dealer. I have had mine 5+ years, installed in one house in a carport, moved and installed in another in a garage and it has worked perfect since day 1.
There's a great post someone made explaining in detail how it works, but it has nothing to do with refunds it's all about your tax liability. You just need to have at least 7500 of liability to get the full tax credit.So if I normally get a refund each year of say $10,000, is it fair to say that next year I will get back an extra $7,500 making my refund $17,500?