[michael ti]

My income is around $40k so obviously i cant take advantage of EV $7.5k tax credit. I heard that if you lease your ID4, the dealer will reduce the price by $7.5k right? But I need to drive a lot of miles so the lease option can be tricky for me, After lease like 1 month, can I buy the car with another auto loan? Do I better off just buy ID4 with auto loan in the beginning or lease ID4 and buy later?

Thanks guy

 

[Neil]

There are a few ways to increase your tax liability. Sell appreciated stock to generate a capital gain.

Do you have a tIRA? Convert a portion or all of it to a Roth.

 

[RobertK]

Lease it. That $7,500 off the MSRP is nothing to sneeze at....take full advantage of it. Buy it when lease is over, if you want....but who knows what improvements will be made over the next 3 years.

 

[d287]

You can lease it then pay off the lease immediately… you’re only out the lease fees.

 

[dfox]

You can lease it then pay off the lease immediately… you’re only out the lease fees.

Except, I wonder if that makes you ineligible for the 3 years free EA charging. That is for the "Original Owner" only. Has anyone checked into if this is true?

 

[fireboy92k]

I'd think you'd eat back into that save $7500 quite a bit, as you'd owe taxes in full, plus whatever the VW wanted for you to get out of the lease. Seems more trouble than it's worth to me honestly. Your really only easy way is to lease where VW takes it off the top.

 

[d287]

VW doesn’t have a prepayment penalty on their leases. It’s about a grand - just lease origination and termination.

 

[fireboy92k]

VW doesn’t have a prepayment penalty on their leases. It’s about a grand - just lease origination and termination.

Yeah, but you'd owe sales tax on the entire cost of the car at the buyout, because you didn't pay it when you leased the car.

Also worth a note that some companies I read have been denying buy outs for fear people are taking them and selling the cars at a profit. They don't HAVE to let you out. They probably will

 

[Don]

When we bought our first Mitsu iMiEV in 2012, I didn't qualify for $100 of the $7,500, but since my brother lived across the street and he worked 6 months of every year in Alaska, he had almost exactly $7,500 of tax liability, so we bought the car jointly - Titled it in both our names and he got his credit and gave (most of it) to me

This time, no such luck - While I can pay cash for the car, line 15 of last years tax return was about $350, so that's all the credit we would probably get this year too, but . . . . we do have a sizeable chunk of yet to be taxed IRA money (not Roth) stashed away for use later on that we're about to have to pay taxes on. I've been taking RMD's from my own IRA since I turned 70 a few years back, but my wife is now 69 and her IRA is huge compared to mine, so the plan is to take a lump sum $65K distribution from her IRA this December which should give us about a $7,500 tax liability this year, so we'll be converting pre tax IRA money tax free. It's not the same as saving $7,500 off the price of the car, but then it a way, it is

Don

 

[JPWhite]

There are a few ways to increase your tax liability. Sell appreciated stock to generate a capital gain.

Do you have a tIRA? Convert a portion or all of it to a Roth.

Converting to a Roth is a very smart move, fed gives you the taxes back anyway lol with the EV tax credit..

 

[edid4]

I sold a rental home in January 2021 after renting it for 11 years. I made a very nice gain and thus capital gain tax and will definitely owe more than $7,500.00 in April. I paid cash for the car so the deduction is definitely mine.

 

[Neil]

I sold a rental home in January 2021 after renting it for 11 years. I made a very nice gain and thus capital gain tax and will definitely owe more than $7,500.00 in April. I paid cash for the car so the deduction is definitely mine.

Of course it isn’t what you owe in April, but your actual annual tax liability that determines your ability to take the tax credit. I assume that’s what you really meant.

I only mention this because there are a surprising number of people who think the tax credit is based on what they owe AFTER withholding and estimated tax payments, which is not the case.

 

[Ray Noneya]

Take enough money from a tax shelter to raise your taxes ..then take the $7500 cedit and you get the money without paying tax on it

 

[edid4]

Of course it isn’t what you owe in April, but your actual annual tax liability that determines your ability to take the tax credit. I assume that’s what you really meant.

I only mention this because there are a surprising number of people who think the tax credit is based on what they owe AFTER withholding and estimated tax payments, which is not the case.

You are exactly right.

 

[fireboy92k]

It's not the same as saving $7,500 off the price of the car, but then it a way, it is

Any way you save it, it's not money owed to Uncle Sam.

 

[michael ti]

I sold a rental home in January 2021 after renting it for 11 years. I made a very nice gain and thus capital gain tax and will definitely owe more than $7,500.00 in April. I paid cash for the car so the deduction is definitely mine.

I'm in the similar situation like you. Sold my primary home for $30k cap gain, and i apply capital gain exemption for my home, can I still use the $7.5 tax credit to offset my cap gain.

 

[Wilsonium]

Except, I wonder if that makes you ineligible for the 3 years free EA charging. That is for the "Original Owner" only. Has anyone checked into if this is true?

Refinancing the vehicle does not change the name of the first owner. The only thing that changes on the title is the Leasor lien will become a Financing Lien. I just did this because I'm traveling for work more and putting more miles on it than my lease allows.

 

[Volt-Wagon]

My income is around $40k so obviously i cant take advantage of EV $7.5k tax credit. I heard that if you lease your ID4, the dealer will reduce the price by $7.5k right? But I need to drive a lot of miles so the lease option can be tricky for me, After lease like 1 month, can I buy the car with another auto loan? Do I better off just buy ID4 with auto loan in the beginning or lease ID4 and buy later?

Thanks guy

Just lease the car. You will pay a $699 acq fee and $399 to term the lease. If you stand to gain by taking the full $7500 off the lease and you subtract the upfront costs of the acq fee and term fee, I would imagine your income at 40k would not produce enough tax liability to come close to the $7500. People are saying you have to pay tax at term of the lease, you would pay tax on the balance of the capitalized cost of the car. You would pay tax anyway if you bought the car outright.
I would lease and pay the lease off to capture the tax credit.

What others say is a good option as well to raise your tax liability by realizing gains however I am a fan of not waiting for my money.

 

[michael ti]

Just lease the car. You will pay a $699 acq fee and $399 to term the lease. If you stand to gain by taking the full $7500 off the lease and you subtract the upfront costs of the acq fee and term fee, I would imagine your income at 40k would not produce enough tax liability to come close to the $7500. People are saying you have to pay tax at term of the lease, you would pay tax on the balance of the capitalized cost of the car. You would pay tax anyway if you bought the car outright.
I would lease and pay the lease off to capture the tax credit.

What others say is a good option as well to raise your tax liability by realizing gains however I am a fan of not waiting for my money.

Can I buy out my lease car with used auto loan from the bank? Should I do it the first month after leasing or when the lease come up? I will drive a lot of miles and it will cost a lot for over mileage.

 

[Volt-Wagon]

Depends on your bank. If it was in the first month likely it would still be considered new car to the bank if under 1000 miles. I would do it sooner rather than later interest rates are gonna go up and this joke of an administration…