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Discussion Starter #1
Has anyone adjusted their federal withholdings to accelerate getting the $7500 tax credit back sooner? I’m not sure if any under withholding penalty applies after the tax credit is applied but will definitely qualify for the tax credit as my tax liability far exceeds $7500. I just picked up my Volt last weekend and will have 17 more pay periods left for the year from work. I simply divided $7500 by 17 ($441) and increased my withholdings to compensate (I actually was a little conservative and adjusted by $390/period). I’d much rather get the rebate back sooner over time versus waiting until when I can file. I’ll adjust my federal withholding back at the end of December. Thoughts? (I’m sure they’ll be several!)
 

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I wouldn't do it. Not for any theoretical reason -- what you did is fine -- but just because all the empirical evidence suggests that people make better decisions when they get money in a lump rather than in small installments. OT, this was the reason the Bush tax program in 2007-2008 was such a failure. His administration correctly predicted the slowdown and correctly decided on a stimulus, but by making the tax refund a lump sum didn't end up stimulating demand as desired.
 

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Has anyone adjusted their federal withholdings to accelerate getting the $7500 tax credit back sooner? I’m not sure if any under withholding penalty applies after the tax credit is applied but will definitely qualify for the tax credit as my tax liability far exceeds $7500. I just picked up my Volt last weekend and will have 17 more pay periods left for the year from work. I simply divided $7500 by 17 ($441) and increased my withholdings to compensate (I actually was a little conservative and adjusted by $390/period). I’d much rather get the rebate back sooner over time versus waiting until when I can file. I’ll adjust my federal withholding back at the end of December. Thoughts? (I’m sure they’ll be several!)
I'll assume that you meant that you decreased your withholding? And no....any penalty for underwithholding is based on the bottom line of tax you owe, so it will be after the tax credit is figured in.
 

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What OP is proposing is fine...as long as the math is done correctly. If it turns out that your tax liability is less than the $7,500 you expected...well, you'll get a not so nice surprise when you go to file your taxes the following year. And possibly an underpayment penalty as well.
 

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Discussion Starter #5
I wouldn't do it. Not for any theoretical reason -- what you did is fine -- but just because all the empirical evidence suggests that people make better decisions when they get money in a lump rather than in small installments. OT, this was the reason the Bush tax program in 2007-2008 was such a failure. His administration correctly predicted the slowdown and correctly decided on a stimulus, but by making the tax refund a lump sum didn't end up stimulating demand as desired.
For me that's not an issue. I have no problem saving money and having it sooner (spread out over the next 5.5 months). This will give me the opportunity to either bank or invest the cash. I'm philosophically against giving the government a free loan and always shoot for either getting nothing back or owing some amount.


I'll assume that you meant that you decreased your withholding? And no....any penalty for underwithholding is based on the bottom line of tax you owe, so it will be after the tax credit is figured in.
I increased the number of withholdings on my W4, which effectively decreased the amount being withheld from my paycheck. Thanks for the feedback.
 

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I did this. More than doubled the total number of allowances on line 5 of my W-4. I should still overpay a bit this year, and get a refund next year, but not a huge amount.

On the flip side, I increased my contribution to my 401k to its maximum. Net result is that nearly all tax credit for my new Volt goes into my 401k and I see little difference in my take-home pay.
 

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Discussion Starter #9
Correct ... I increased the number of exemptions/allowances/dependents which resulted in a decreased amount of federal tax withheld from my paycheck.
 

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Discussion Starter #11
I did this. More than doubled the total number of allowances on line 5 of my W-4. I should still overpay a bit this year, and get a refund next year, but not a huge amount.

On the flip side, I increased my contribution to my 401k to its maximum. Net result is that nearly all tax credit for my new Volt goes into my 401k and I see little difference in my take-home pay.
That's a good strategy! This way the money never hits your pocket and is banked into your 401k. For me, I'm already at the maximum yearly contribution ($18K deferral + plus $6K catchup for being over 50) ...so I'll use other means to stash away my prefund!
 

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Agree, it's fine. But remember that you want to pay the full $7500 back into any car loan, since the car depreciates $7500 as soon as you buy it. Always understand your equity position.
 

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Discussion Starter #13
Agree, it's fine. But remember that you want to pay the full $7500 back into any car loan, since the car depreciates $7500 as soon as you buy it. Always understand your equity position.
Yep, already did that. I included the $7500 tax credit + $1500 CA Rebate in my down payment for the vehicle
 

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Discussion Starter #14
Seeing as I did my taxes last year with Turbo Tax (and have so since the program used to be on floppies!!), I ran two scenarios :

  1. I went back and claimed the vehicle credit as though I had purchased the Volt in 2015. The result was that the amount of my federal refund increased by $7500 (as expected)
  2. I then went to my W-2 and decreased the amount of federal tax withheld by $7500. The result was that the amount of my refund returned back to the original amount I had received for 2015 tax year.
Now of course, this applies to my own personal tax situation, but seems like there is no tax risk in prefunding the $7500 over the rest of the year by increasing my exemptions on my W-4 to decrease the amount withheld amortized over the rest of the year.
 

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Recently changed my witholding to zero as well about 1/2 way through the year. My tax liability won't be enough to get the full 7500, but I'll be close.

In the meantime my paycheck went up a nice chunk and been socking money away for the car since then. Even when tax time comes in april, I'll still get a refund check from them from all the Federal taxes paid to them automatically from the first 1/2 of the year.

Other side bonus -- been working tons of overtime lately, and it's kind of nice knowing that pretty much every dollar is going into my pocket instantly instead of being taxed like crazy. (No state taxes here in TX yay)

Funny enough my 2017 volt is at the dealership right now waiting for me to take delivery, been gone for work and with my weird night schedule is means I'll probably have to wait till Friday morning to go and get it.

Been aching for a private offer code again (been on the chevy website constnatly refresing) I had an authorization code, but since it took longer to get the car in, it actually expired 2 weeks ago. *sad panda* Knowing such an easy way to save 1K is out there but have to have the right code, grrr.

Even contacted the GM rep that is here on the forum, she looked into it and was told (by marketing) that they can't reissue a code that hasn't been used even though I'm ready to buy literally today since it's waiting on me at the lot.
 

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Those of us who pay estimated tax have a much easier time of it. After I bought the Volt in March, I used my (self created for dental offices) software to reduce my payment by $7500 for installment 1 of 4. We just picked up our Tesla yesterday and I will use the same method to reduce installment 3 of 4 by the same amount. I did the same for both our 2012 Volts.

And I disagree with DonC...the government's rate of interest on YOUR money it HOLDS for you until time to settle up on April 15th is ZERO. Just because some people are too stupid to figure out how to manage their funds is not a reason to give EVERYONE advice to give the government more money than it is entitled to. Of course, those who pay monthly interest on credit cards while using those credit cards to get 'rewards' are probably not the people who should be messing with tax withholding in the first place. [And this is not to imply anything about OP...just a reminder of the type of person who is better off following DonC's advice.]

FYI...reminder...EV tax credit (unlike EVSE credit) is NOT effected by Alternative Minimum Tax. However, unlike PV credit, EV credit is not refundable, meaning that you can't reduce your tax liability below zero.
 

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Discussion Starter #17
Those of us who pay estimated tax have a much easier time of it. After I bought the Volt in March, I used my (self created for dental offices) software to reduce my payment by $7500 for installment 1 of 4. We just picked up our Tesla yesterday and I will use the same method to reduce installment 3 of 4 by the same amount. I did the same for both our 2012 Volts.

And I disagree with DonC...the government's rate of interest on YOUR money it HOLDS for you until time to settle up on April 15th is ZERO. Just because some people are too stupid to figure out how to manage their funds is not a reason to give EVERYONE advice to give the government more money than it is entitled to. Of course, those who pay monthly interest on credit cards while using those credit cards to get 'rewards' are probably not the people who should be messing with tax withholding in the first place. [And this is not to imply anything about OP...just a reminder of the type of person who is better off following DonC's advice.]

FYI...reminder...EV tax credit (unlike EVSE credit) is NOT effected by Alternative Minimum Tax. However, unlike PV credit, EV credit is not refundable, meaning that you can't reduce your tax liability below zero.
I'm with you ... I haven't paid a nickel of credit card interest in over 20 years and DO use them for EVERYTHING I can that doesn't charge me a fee to use the card. I opt for cash back over miles or points and typically get anywhere from $1000~1500 back per year. In fact, I charged the most I could of my down payment on my credit card and will pay it off in full (as I do every month) and get the benefit of extra cash. The dealer would only take $3000 on CC and with my 1.75% back on non-fuel, restaurants, grocery stores that equates to an extra $52.50 back in my pocket. Not a lot, but I'll take it!
 

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It's no different than adjusting your withholding for any other change in circumstances. When we found out in spring of 2014 that we were having another baby, and he was going to arrive in December (thus getting us the full tax credit for that year), we reduced our withholding for the remainder of the year to avoid a big refund (aka, loan to the government).

I would certainly do it if I were buying a new Volt (which I'm not) and had enough tax liability (which I don't). Just don't forget to re-adjust your withholding for next year!
 
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