[Enzo589]

Does anyone have any ideas on how to “owe” money to the government so I can take advantage of the ev federal tax credit? I know my wife and I won’t be owing the government anywhere close to $7500 for next year’s taxes. One idea I had was to have my Dad be on the title with me, as he pays a good amount of taxes every year. But, I’m not sure if the government would allow that to go through.

 

[NBCGLX]

It’s not about owing $7,500 in taxes on April 15 (which results from an underpayment of taxes throughout the year). Rather, this type of credit directly reduces tax liability. So long as you have paid (throughout the year) at least $7,500 in Federal income tax, then you are eligible for the EV credit. Keep in mind, however, that other credits may reduce your tax liability, and therefore could affect the actual amount of the EV credit you’re eligible to receive.

The majority of taxpayers who can afford an EV like the ID.4 will have tax liability far exceeding $7,500 for the year. However, it’s always best to consult with a tax professional or use one of several websites that help you determine eligibility for the EV credit, to be sure.

 

[TT97]

Are you talking about what you owe when you file or how much you pay in taxes (typically, that your employer takes out from your paycheck) through the year? The rebate is from what you pay through the year not what you owe when filing. In order to pay $7,500 in taxes, married filing jointly needs to make roughly $85k.

You could have your dad on the title but then you would not be able to have both you and your wife on the title and your dad would also need to be on the loan (not sure about insurance).

There are other ways to increase your tax liability such as selling stocks for profit or potentially converting IRA to Roth IRA but would recommend discussion with an accountant.

EDIT: Pretty much what @NBCGLX said, I type too slow.

 

[Enzo589]

Thanks guys! That helps clear things up. I will definitely talk to a tax professional.

 

[Drew18]

I looked at last years taxes and found my liability. A good portion of my salary is tax exempt and my liability is nowhere near 7500 after deductions. For this I’m planning on leasing since VW is passing the 7500 along on a lease. Then I’ll either buy it out after the lease or upgrade since EVs make a lot of progress in 3 years time.

 

[Enzo589]

So does it meant that if your tax liability is greater than $7500, you’ll get $7500 from the government? Even, for example, if you will be receiving money from the government because you paid too much throughout the year?

 

[terasain]

yes

 

[eldecarlo]

Make sure you can buy car at end of lease. You can’t withTesla. I haven‘t seen VW’s info.

 

[TT97]

So does it meant that if your tax liability is greater than $7500, you’ll get $7500 from the government? Even, for example, if you will be receiving money from the government because you paid too much throughout the year?

If you take a look at your most recent 1040 (2019 filed this year) - your tax obligation for the year was Line 16 (Total Tax) - that is the line that needs to be over $7,500 to get the full amount. (Assuming you didn't have any EV/other one time credits in 2019 that would have lowered Line 16.)

 

[Enzo589]

Got it, thanks! I feel better about the purchase now that I understand how the credit works. It’s a lot of money on the table and would suck not to qualify for it!

 

[jlewis3323]

Does anyone have any ideas on how to “owe” money to the government so I can take advantage of the ev federal tax credit? I know my wife and I won’t be owing the government anywhere close to $7500 for next year’s taxes. One idea I had was to have my Dad be on the title with me, as he pays a good amount of taxes every year. But, I’m not sure if the government would allow that to go through.

One way is to withdraw money from 401K or IRA in an amount that would require you to pay $7500+ in Federal taxes. Some funds allow you to put the money back without penalties as long as it is done within a year.

 

[NBCGLX]

One way is to withdraw money from 401K or IRA in an amount that would require you to pay $7500+ in Federal taxes. Some funds allow you to put the money back without penalties as long as it is done within a year.

There’s almost always a way to get the credit 😉

 

[tennsc]

Just, lease it then buy out the lease.

 

[eldecarlo]

Just, lease it then buy out the lease.

Have to make sure you can buy the car if you lease. Can’t buy Tesla’s after lease.

 

[ID.4]

Just, lease it then buy out the lease.

I was going to suggest the same as long as the numbers from VW are decent and you can live with the mileage restrictions. This will allow you take advantage of the $7,500 Federal tax credit that VW will apply as a lease incentive, see how the VW works for you, look at market acceptance on the VW EV and depreciation, and allow you to purchase or walk away at the end of the lease. You will be paying more, but have flexibility.

 

[tennsc]

Have to make sure you can buy the car if you lease. Can’t buy Tesla’s after lease.

Yeah, Tesla is a totally different situation. Allegedly, Musk is going to take all the leased M3's and turn them in to autonomous taxi's. That said any other lease that I've had including VW has had a "payoff". That number you can take to your bank and get a loan. I know with my credit union they have competitive rates for "late model" used cars. So, if I like the ID4, i'll go ahead an buy out my lease early assuming I can get a good rate from my bank.

 

[Drew18]

I asked my dealer sales manager and he said buyout at lease end would be an option

 

[Vwvkk]

One way is to withdraw money from 401K or IRA in an amount that would require you to pay $7500+ in Federal taxes. Some funds allow you to put the money back without penalties as long as it is done within a year.

Great idea, I’m planning to roll over from 401k to Roth

 

[ID.4]

Great idea, I’m planning to roll over from 401k to Roth

If you need additional Federal taxes, the IRA rollover is a great way to go.

 

[air]

Is there an online calculator or tool to estimate how much one would need to rollover their 401K to cover the difference between tax liability to get the full $7500 tax credit?