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Maximize credit when self-employed?

Maximize credit when self-employed?

So, I'm being lazy... and this is a crappy forums for "capabilities" like search. I am on the list for the '3' - reservation made on April 2nd... a few very long days in. My hunch is I can't expect my delivery before April, probably a few months out from that, but I do expect it in 2018. For the moment, let's assume I'll be entitled to the $3750, which I understand just means "up to $3750" because the government isn't going to write a check if I am OWED, but will essentially allow that amount of tax liability to "not have to be paid" if still owed for 2018 taxes when I file in April of 2019.

Q1: Is all of that a fair analysis so far?
Q2: Assuming I pay about $4000-5000 per quarter in estimated quarterly tax payments (because I own my own LLC) couldn't I simply skip making any of my quarterly payments next year?

Q3: Assuming yes, would you put that extra $3750 towards down-payment, knowing you're getting it back 6-12 months later, or would you use it for something else? (this question is just for fun)
I like the idea of owing less on the car, but then there's the risk that something happens and you *don't* end up getting it back. Also, assuming great credit, I will likely end up with a low interest rate... so is it really worthwhile putting more "down" on the car anyway, or can't that $$ be better utilized elsewhere?

And yes, I realize I may also still get $7500... and I know I *could* end up getting $1875 or zilch... this is really just to set myself up to MAXIMIZE whatever it is I'm entitled to, and I suspect my line of reasoning is viable.

tes-s | 3 luglio 2017

To avoid penalty, I suggest not reducing your quarterly payments until you are certain you are buying the car in 2018 and will be entitled to a tax credit.

If you were going to pay $20,000 in quarterly payments (divided by 4 each quarter), then reduce the total by the tax credit that will be available to you, divide by 4, and that is your new total. Divide by 4, and make sure you have paid at least that total by quarter.

If you made 2 payments ($10,000 total), then were sure you were going to get the car in 2018 and would get $3,750 tax credit, your total would be $16,250 for the year, or $4062.50 per quarter. So Q3 would be $2187.50 and Q4 would be $4062.50. If during Q4 you realized you would be entitled to the full $7,500 tax credit, you could reduce your Q4 estimate by $3,750.

If you claim part or all of the car as business use, and pay AMT, your tax credit may be reduced.

I am not a tax accountant.

mntlvr23 | 3 luglio 2017

If you have a tax liability of $20,000, you will be able to get the full tax credit that is available at the time that you take delivery of the car - be it $7500, $3750, or $1875.
It will not really matter how much you withhold - that will have no affect on you maximizing your tax credit, you'll get what's available. If you withhold too much, the gov will write you the check as a refund

brian | 3 luglio 2017

Hmmm, I thought I'd read something where they wouldn't write a check, but... I must have misunderstood. So, as long as my tax LIABILITY for the year (paid in quarterly or not) is more than the $7500, $3750, etc... I'll still get it? Also, this all assumes current politics don't remove the EV credit from the 2018 budget.

steveg1701 | 3 luglio 2017

What you read about them not writing you a check was that if your tax liability is less than the 7.5K (or whatever) they will not write you a check for the difference. Assume that your tax liability is 5K and the tax credit is 7.5 then you would be paying no tax (and would get back any prepayments) but you would not get the extra 2.5K

Darryl | 3 luglio 2017

Check line 29 on your 1040. This is the maximum you can get back assuming their still is a tax credit and it hasn't ran out.

Coastal Cruiser. | 3 luglio 2017

Q1: Is all of that a fair analysis so far?
Yes.

Q2: Assuming I pay about $4000-5000 per quarter in estimated quarterly tax payments (because I own my own LLC) couldn't I simply skip making any of my quarterly payments next year?
If you skip you will be eligible for late penalties, regardless of any credit you are liable for at year end.

Q3: Assuming yes, would you put that extra $3750 towards down-payment, knowing you're getting it back 6-12 months later, or would you use it for something else? (this question is just for fun)
Too many moving parts to speculate. ;>

reed_lewis | 3 luglio 2017

The EV car tax credit is off your total tax liability, not what you owe at the end of the year.

If you would be getting a $1000 refund, and get $3750 for the EV rebate, then you would get a check from the IRS for $4750.

If you owe $2000 at the end of the year, you would instead get a check from them for $1750.

Withholding amounts make no difference.