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I recently bought a German made ID4 under the assumption that I’ll qualify for the $7,500 tax break when I file next year. But then I came across this quote and hope my tax break won’t be eliminated.

There is one big catch, however. The program would only apply to American-made EVs. If, say, an automaker builds an EV in Europe and sells it at a US dealership, it's a no go. So far, it appears a foreign automaker building an EV in the US would still qualify and this wouldn't be an exclusive benefit to US automakers.”
 

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I don't think that level of detail from Biden's infrastructure plan has been released, and it's all subject to change anyways. It's possible non-US made cars will lose out in future years. But it's hard to imagine they would yank away the credit from anyone who bought an EV this year - more likely there will be a phase-out period.
 

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I don't know about the future, and I would be very surprised if the new plan is both passed and implemented this year, but currently the vehicle's country of origin is irrelevant for the $7,500 Federal tax credit.
 

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I don't know about the future, and I would be very surprised if the new plan is both passed and implemented this year, but currently the vehicle's country of origin is irrelevant for the $7,500 Federal tax credit.
They tax credit itself is pretty much irrelevant if you're one who never has to pay in as far as I understand it. I hope I'm wrong but, being that it's nonrefundable, it's not like the tax man cuts you a check for buying an EV.
 

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They tax credit itself is pretty much irrelevant if you're one who never has to pay in as far as I understand it. I hope I'm wrong but, being that it's nonrefundable, it's not like the tax man cuts you a check for buying an EV.
You're correct that if you don't pay any Federal income taxes you can't claim the credit. You have to have an annual tax liability of at least $7,500 to claim the credit. Note that this is irrespective to what you might "owe" or be due via refund on April 15. The tax credit applies to your tax liability for the year in which you purchase the eligible EV (i.e., how much in Federal income tax you had to pay over the course of the year).
 

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You're correct that if you don't pay any Federal income taxes you can't claim the credit. You have to have an annual tax liability of at least $7,500 to claim the credit. Note that this is irrespective to what you might "owe" or be due via refund on April 15. The tax credit applies to your tax liability for the year in which you purchase the eligible EV (i.e., how much in Federal income tax you had to pay over the course of the year).
To be clear you need a liability of $7500 to claim the full credit. If your tax liability for the year is $6364 for example you'll get a $6364 credit. For a typical household I think around a $65k income will pay enough in taxes to get the full benefit, but everyone's situation is different.

And yeah, don't confuse tax liability with your refund/amount owed. Look for the line that says "total tax" on your 1040 (line 24 for tax year 2020). Any numbers below that are irrelevant.
 

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They tax credit itself is pretty much irrelevant if you're one who never has to pay in as far as I understand it. I hope I'm wrong but, being that it's nonrefundable, it's not like the tax man cuts you a check for buying an EV.
You always have to "pay in" in the form of withholding if you're getting a paycheck.
 

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To be clear you need a liability of $7500 to claim the full credit. If your tax liability for the year is $6364 for example you'll get a $6364 credit. For a typical household I think around a $65k income will pay enough in taxes to get the full benefit, but everyone's situation is different.

And yeah, don't confuse tax liability with your refund/amount owed. Look for the line that says "total tax" on your 1040 (line 24 for tax year 2020). Any numbers below that are irrelevant.
So you're saying I could get the $7,500 on top of my usual refund? I think I've paid enough taxes out of my pay this year already to qualify for the full amount but I was assuming, if you normally get a refund, you receive nothing for the tax credit.
 

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So you're saying I could get the $7,500 on top of my usual refund? I think I've paid enough taxes out of my pay this year already to qualify for the full amount but I was assuming, if you normally get a refund, you receive nothing for the tax credit.
For the purposes of determining your eligibility for this tax credit, ignore for a moment your typical refund amount, ignore how much you had withheld throughout the year. The only number that matters is your total tax after any other credits (such as the child tax credit) are figured in. If that number is greater than zero you can take the credit, if it's greater than $7500 you can take the full $7500. Pull up your last 1040 and find that number, of course it won't be the same every year but it will give you a rough idea, assuming you don't have any major income changes or tax-affecting life events in 2021.

Usual disclaimer, I'm not a professional, consult your own accountant, etc.
 

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There's a guide on the IRS website how to modify your W4 to have your employer withhold $7500 less during this calendar year so you get it back over time in each check. Make sure you do it right so you don't owe a big chunk next April. This worked out well for me. Just make sure you change it back in 2022.
 

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Pull up your last 1040 and find that number, of course it won't be the same every year but it will give you a rough idea, assuming you don't have any major income changes or tax-affecting life events in 2021.
Specifically, Line 24 of the 2020 1040 shows your "total tax." That is the number than needs to be greater than $7,500 to get the full credit (assuming you do not have other credits).
 

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tl;dr: US made EVs only. No 200,000 unit limit. $12,500 from union shop EVs (Michigan), $10,000 non-union (Tesla and possibly TN VW)
 

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tl;dr: US made EVs only. No 200,000 unit limit. $12,500 from union shop EVs (Michigan), $10,000 non-union (Tesla and possibly TN VW)
This is just speculation until it is passed as a law. The President has sway with how his party crafts a bill but ultimately it is up to Congress to create and pass the bill before he signs it. I do hear strong support in ending the quotas and allowing credits for Tesla/Chevy but advantages for unions would be a hard sell. The US built only could get through but by then TN will probably be producing anyway. The size of the credit is also pretty high, would most likely be above a lot of people liability especially with enhance child tax breaks.
 

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This is just speculation until it is passed as a law. The President has sway with how his party crafts a bill but ultimately it is up to Congress to create and pass the bill before he signs it. I do hear strong support in ending the quotas and allowing credits for Tesla/Chevy but advantages for unions would be a hard sell. The US built only could get through but by then TN will probably be producing anyway. The size of the credit is also pretty high, would most likely be above a lot of people liability especially with enhance child tax breaks.
Unless it's refundable and administered as a instant rebate at the point of sale, which it should be because it's dumb to have to wait until you file your taxes to get the money.
 

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Unless it's refundable and administered as a instant rebate at the point of sale, which it should be because it's dumb to have to wait until you file your taxes to get the money.
The rough part for some of us is the sales tax and registration are paid on the sale price. Vegas has an 8.3% sales tax and my registration was over $800. Doesn’t matter what math I use, that hurts.
 

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The size of the credit is also pretty high, would most likely be above a lot of people liability especially with enhance child tax breaks.
Reports are still very fluid, but it looks like one of the proposed changed is that you can get the full credit even if you do not have the tax liability. I also saw an income cap proposed but not sure if that passed the committee.
 

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The new tax incentives is mostly form to let Tesla and GM to compete back in pricing with new competitors like VW, kia and Hyundai. With $10k incentives Model Y drops to $42k in line to kill ID4 sales. Tesla sales will drop drastically if this incentive is not implemented and I think that is goal of US regulators. Tesla needs to be selling or it will go BK. The zev credit is gone this year, and without zev credit of $1.5billion in 2020 Tesla would report major loss last year.
 
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