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You will get the full credit under the "old" rules through January 1, 2023 provided you pay, through withholding, estimated taxes, etc, at least $7500 in taxes.

Dave
Not exactly true as you describe it. Under the current system, it doesn’t matter how much tax you paid or didn’t pay that determines whether you get the full credit. It’s solely dependent on your total tax liability, that is, how much you owe based on your taxable income. You might have had, say, $8000 withheld from your paycheck during the year, but if it turns out at tax time that your tax liability (what you owe) is only $6000, you’d still only be eligible for a $6000 credit. In this scenario, you’d get a refund of $8000 — the $2000 you overpaid through withholding plus the $6000 tax credit paid against your tax liability.
 

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Not exactly true as you describe it. Under the current system, it doesn’t matter how much tax you paid or didn’t pay that determines whether you get the full credit. It’s solely dependent on your total tax liability, that is, how much you owe based on your taxable income. You might have had, say, $8000 withheld from your paycheck during the year, but if it turns out at tax time that your tax liability (what you owe) is only $6000, you’d still only be eligible for a $6000 credit. In this scenario, you’d get a refund of $8000 — the $2000 you overpaid through withholding plus the $6000 tax credit paid against your tax liability.
True. That is what I was thinking when I typed "etc" - the sum of all payments of all kind have to be greater than $7500. I'm sorry I wasn't clear.

Dave
 

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True. That is what I was thinking when I typed "etc" - the sum of all payments of all kind have to be greater than $7500. I'm sorry I wasn't clear.

Dave
Yeah, the way it was worded sounded like you were saying that the amount of the tax credit you’re eligible for depends on how much you paid in taxes (e.g. via paycheck withholding), when what it depends on is how much you owe no matter how much you’ve already paid. Whether or not you end up with a refund depends on a) how much of the credit you qualify for based on how much tax liability you have (the total you owe in taxes based on your taxable income), and b) how much you’ve already paid. It gets confusing on the 1040 because there’s a big line that says “you owe” if you underpaid, and many people confuse this “you owe” line with their tax liability when it’s just the difference between what they already paid and the total taxes they owe.
 

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Yeah, the way it was worded sounded like you were saying that the amount of the tax credit you’re eligible for depends on how much you paid in taxes (e.g. via paycheck withholding), when what it depends on is how much you owe no matter how much you’ve already paid. Whether or not you end up with a refund depends on a) how much of the credit you qualify for based on how much tax liability you have (the total you owe in taxes based on your taxable income), and b) how much you’ve already paid. It gets confusing on the 1040 because there’s a big line that says “you owe” if you underpaid, and many people confuse this “you owe” line with their tax liability when it’s just the difference between what they already paid and the total taxes they owe.
Yep. And it appears now that none of this will matter once the new EV tax credit rules go into effect.

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Man, and I'd just mastered the old system! :D
The new system has so many downsides and disadvantages so many new US EV companies that it's quite possible it will undergo dramatic changes during the process of reconciliation between the two chambers of Congress. I only see one good clause in this bill vis-à-vis EV credits, which is to limit the gross income to $150,000 per person / $300,000 per family in order to qualify for the credit. All other limitations (place of manufacturing, maximum MSRP, source of battery components, etc.) are counterproductive.

Two such EV companies to be disadvantaged by the proposed bill come to mind: Rivian and Fisker. Rivian's (American company) EVs exceed the maximum MSRP to qualify for a credit in the proposed bill. Fisker (American company) designs the cars in the US but uses a contract manufacturer (Magna) that has a manufacturing plant in Austria; hence, it's disqualified from the EV credit in the proposed bill. However, two foreign EV manufacturers - Hyundai and Kia - qualify for the EV credit according to the proposed bill even if they continue to manufacture their EVs in South Korea because South Korea is considered by the US to be a Free Trade Zone, which qualifies Korean EV manufacturers for EV credits according to the proposed bill. This just makes absolutely no sense to me.
 

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The new system has so many downsides and disadvantages so many new US EV companies that it's quite possible it will undergo dramatic changes during the process of reconciliation between the two chambers of Congress. I only see one good clause in this bill vis-à-vis EV credits, which is to limit the gross income to $150,000 per person / $300,000 per family in order to qualify for the credit. All other limitations (place of manufacturing, maximum MSRP, source of battery components, etc.) are counterproductive.

Two such EV companies to be disadvantaged by the proposed bill come to mind: Rivian and Fisker. Rivian's (American company) EVs exceed the maximum MSRP to qualify for a credit in the proposed bill. Fisker (American company) EV designs the cars in the US but uses a contract manufacturer (Magna) that has a manufacturing plant in Austria; hence, it's disqualified from the EV credit in the proposed bill. However, two foreign EV manufacturers - Hyundai and Kia - qualify for the EV credit according to the proposed bill even if they continue to manufacture their EVs in South Korea because South Korea is considered by the US to be a Free Trade Zone, which qualifies them for EV credits according to the proposed bill. This just makes absolutely no sense.
No, I don't think so on the reconciliation. This thing is hanging by a thread in the Senate, so there will be no changes that would jeopardize that.

Also, the Koreans will NOT qualify under the new rules, because they do not have final assembly in North America (which is one of the restrictions). That final assembly clause states North America only. It is the battery content restrictions that include the language about free trade agreements.

And most EV makers will fail on the half of the credit determined by battery mineral sourcing and processing.


Dave
 
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Read an article that the Alliance for Automotive Innovation that represents General Motors, Ford, Toyota, and others, sent a letter to Senators Schumer & Manchin saying that 70% of the US built vehicles would become ineligible upon passage. Some horsepower there - let the games begin.
 

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Read an article that the Alliance for Automotive Innovation that represents General Motors, Ford, Toyota, and others, sent a letter to Senators Schumer & Manchin saying that 70% of the US built vehicles would become ineligible upon passage. Some horsepower there - let the games begin.
Right, and the remainder will qualify for only half the credit. The article states that no EVs will qualify for the full $7500 under these new rules.

Manchin seems unlikely to budge given comments I have seen attributed to him.

I think the best hope is they stretch out the implementations on some of the new rules over two or three years. Otherwise, Federal Tax Credits are going to grind to a halt in 2023.

Dave
 

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I am all about Made in America to create real jobs so I don’t care about manufacturer’s whining. Adapt or go extinct is their motto, isn’t it? That’s why they shipped our factories overseas or so they said. The worm turns…
 
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