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$7500 TAX CREDIT..??

$7500 TAX CREDIT..??

Our CPA told us because of income our tax credit will be reduced to $4900.00. Has anyone seen this reduction as well. I am not satisfied with the reduction and maybe my CPA is missing something regarding the tax credit.

Dramsey | 9 avril 2017

I am not an accountant, but I believe the only way the credit is reduced is if you owe less than $7500 in taxes. In other words, the gummint won't _pay_ you.

Frank99 | 9 avril 2017

As a quick sanity check, according to this page:
https://taxfoundation org/how-much-do-people-pay-taxes/
people in the $50K-$75K range of income per year pay on average 15.2% in income taxes. That suggests that if your income is about $50K, on average people will pay about $7500 in federal taxes, and on average will be able to claim the entire $7500 credit.
If you're below this range of income, you'll probably be limited in the amount of credit you can get. If you're in it, you'll probably get the whole thing.

Jeff Hudson | 9 avril 2017

Use these two links as well as your Federal Form 1040 which contains required information to ascertain the reason for your reduction in the Plug-In Tax Credit. You will probably discover either you did not have enough tax liability to benefit from the entire tax credit or you had other personal credits (per the instructions - Form 1040, lines 48 through 51).

https://www.irs.gov/pub/irs-pdf/f8936.pdf
https://www.irs.gov/pub/irs-pdf/i8936.pdf

Bighorn | 9 avril 2017

Can AMT limit the credit?

Frank99 | 9 avril 2017

ticobird - thumbs up.

Jeff Hudson | 9 avril 2017

Bighorn
A cursory look at the Federal Form 6251 (AMT) Instructions on page 1 indicates that the taxpayer must file Form 6251 if they "claim the qualified electric vehicle credit," which implies the EV Plug-In tax credit could be affected by the AMT. I am not a tax professional - just an ordinary do-it-myself taxpayer. I use TurboTax and I know it fills out all of the necessary tax forms as long as you answer the program questions correctly.

OP, ask your CPA to explain it to you.

DTsea | 9 avril 2017

having bought two model s and paying amt i can tell you i am pretty sure amt doesnt limit credits- limits deductions.

stevenmaifert | 9 avril 2017

The Qualified Plug-In Electric Drive Motor Vehicle Credit is not affected by the AMT. If it were, there would be a line on Form 8936 where you would subtract all or a percentage amount of the AMT you owe from your allowable credit. If the OPs CPA is telling him he only qualifies for $4900, hopefully that means that's all he owes and it will reduce his tax liability to zero, he will get all his withholding back, and not the CPA misinterpreting a form or instruction. Otherwise, he would qualify for the full $7500.

LErlinger | 9 avril 2017

Thanks for the help. Looking through the forms sent from my CPA, I found some
mistakes and once straightened out we will be entitled for the full credit.

Bighorn | 9 avril 2017

Glad you figured it out

vp09 | 9 avril 2017

tico bird, or explain it to your CPA!

rxlawdude | 10 avril 2017

Yep, the CPA is wrong unless the taxpayer owes less than $7500

Fast Girl | 12 avril 2017

Uh, according to our CPA, the credit is applied regardless of income. Just like when we put in solar panels 3 years ago, we were not able to use all of our credit in that year due to other deductions bringing our taxes to zero. Thus, the portion of the federal tax credit that we could not use was rolled over to the following year. This guy used to be an auditor so I guess he knows what he is doing. Thus, we got the whole credit over 2 years.

SUN 2 DRV | 12 avril 2017

No rollover of EV tax credit to next year.

However there are tricks for increasing you're tax liability (eg convert Roth IRA) so you can qualify for more of the tax credit in the year you bought the EV.

Bighorn | 12 avril 2017

@Fast Girl
Different rules for PV vs EV.

Fast Girl | 14 avril 2017

@sun, @big, yes, agree. That is basically what he told me. And yes some ways to get around it and take the full credit if needed. But he gives me good news and bad news.... Bad news is Uncle Sam will get way too much of my money this year. Good news, is that they get so much, that I will get the full credit. Hmm, not sure I like the good news ;-)