[palmtree]

I couldn't find anything about this, but that doesn't mean it's not there. Sorry if this is a repeat.
I do my own taxes every year but I am no tax wizard. We just happen to have a fairly simple tax situation so it's no big deal to plug it into HR block. We just take the automatic deduction since we don't have much to deduct besides some charities and stuff like that. We don't have a mortgage or any other debt. Looking back at 2016 taxes our federal tax was only $3361. We make a good bit over the $58k or so that I've read would get most people over the hump to get the tax credit. However, once my 403b and healthcare and dental, vision all that stuff is deducted pretax it gets our taxable income down and we also have to kids that give us the child tax credits.
I can't remove anything from my retirement because I am only 45 and there would be early withdrawal penalties. Leasing is not an option since I put too many miles on my cars and I like to keep them for 10 years or so and wear them out. I would love to buy used but they seem overpriced considering the $7500 tax credit that someone already claimed on them. Can anyone think of any good tax ideas that I may not have thought of?
Thanks

 

[BillG]

Well, if your tax situation is the same this year, you would definitely get the $3361 as a tax credit. Some other things you could do are convert your IRA savings to Roth IRA, triggering a tax liability, or sell some stocks or other investments which would result in capital gains tax.

 

[Upper5Percent]

Well, if you had a Taxable income of $58,000 with NO deductions
Your Income.............Your Estimated
by Tax Bracket..........Income Taxes by Bracket
$18550 10% $1855
$39450 15% $5917.50
Your Estimated Federal Income Taxes would be $7772.50

So you need to increase your income...or put the wife to work...

 

[obermd]

You won't be able to claim the tax credit on a used Plug In EV. The tax credit only goes to the first buyer.

 

[palmtree]

Well, if you had a Taxable income of $58,000 with NO deductions
Your Income.............Your Estimated
by Tax Bracket..........Income Taxes by Bracket
$18550 10% $1855
$39450 15% $5917.50
Your Estimated Federal Income Taxes would be $7772.50
I don't really have any investments to move around. All of my retirement is in the 403b. Can any of that be moved to a Roth without a penalty (I don't think so -- but I'm not sure)?
So you need to increase your income...or put the wife to work...

Funny you say that. The kids are getting older and my wife is planning to go back to work. She is an RN, BSN so she has the potential to make pretty good money once she gets back into it. Maybe we should just wait another year or so to buy. Hopefully the tax credit will still be around if we wait.

 

[palmtree]

Well, if your tax situation is the same this year, you would definitely get the $3361 as a tax credit. Some other things you could do are convert your IRA savings to Roth IRA, triggering a tax liability, or sell some stocks or other investments which would result in capital gains tax.

I don't really have any investments to move around. All of my retirement is in the 403b. Can any of that be moved to a Roth without a penalty (I don't think so -- but I'm not sure)?

 

[rdunniii]

I don't really have any investments to move around. All of my retirement is in the 403b. Can any of that be moved to a Roth without a penalty (I don't think so -- but I'm not sure)?

About a 2 second Google search will answer the question and yes you can, unless it is an unusual situation. As proposed above that is the best option for you, or anyone else, for that matter. Roth IRAs are superior in every sense except having to pay the taxes on the conversion up front.

 

[palmtree]

About a 2 second Google search will answer the question and yes you can, unless it is an unusual situation. As proposed above that is the best option for you, or anyone else, for that matter. Roth IRAs are superior in every sense except having to pay the taxes on the conversion up front.

I did do that Google search and found a different answer than what you say. According to this website ( http://thefinancebase.com/can-roth-conversion-done-403b-3171.html ) it can only be done when distributions are allowed. In other words only if you're over 59.5 or when you are switching jobs. I don't fit into either of those categories.
The only reason these forums exist is to allow people to ask questions or bounce ideas off of real people. Everything ever mentioned on any forum can be found with a quick google search. Then we lose out on real communication with real people.

 

[Barry]

You mentioned you don't want to buy used because prices seem high, but I would think that is the best way to get the whole tax credit bundled in with the price of the vehicle for someone in your situation. Maybe try searching for some better deals that the ones you have seen so far?

 

[DonC]

You're correct about needing to be either 59 1/2 or no longer working for the sponsoring employer. Not sure what you're situation is. The suggestion was likely based on thinking you were no longer working for the sponsoring employer.

I don't understand why you don't simply lease. You get most of the credit plus all discounts applied to the lease term, and of course you can buy the car at the end of the lease. Only costs you a five hundred dollar acquisition fee.

 

[palmtree]

You're correct about needing to be either 59 1/2 or no longer working for the sponsoring employer. Not sure what you're situation is.

I don't understand why you don't simply lease. You get most of the credit plus all discounts applied to the lease term, and of course you can buy the car at the end of the lease. Only costs you a five hundred dollar acquisition fee.

I put at least 15,000 miles per year on my cars. I'm afraid they would drop the hammer on me when the lease was over.

 

[palmtree]

You mentioned you don't want to buy used because prices seem high, but I would think that is the best way to get the whole tax credit bundled in with the price of the vehicle for someone in your situation. Maybe try searching for some better deals that the ones you have seen so far?

I completely agree. I'd honestly prefer buying a slightly used gen2 over a new one even if I could get the entire tax credit. I've been looking but no luck so far. They seem to be priced like I would expect a used car to depreciate if there wasn't a tax credit already taken by someone.
I just located another used 2017 with low miles listed just $100 over the KBB suggested retail price of $23,346 Seems good enough. After contacting the dealer it ends up that it is once again, a manufacturer buyback vehicle. So far every single volt I've located that was anywhere near the KBB suggested price has been a manufacturer buyback car. I'm starting to think that KBB may be off or the dealers don't really want to sell these cars (pretty sure it's not the latter).

 

[rdunniii]

I did do that Google search and found a different answer than what you say. According to this website ( http://thefinancebase.com/can-roth-conversion-done-403b-3171.html ) it can only be done when distributions are allowed. In other words only if you're over 59.5 or when you are switching jobs. I don't fit into either of those categories.
The only reason these forums exist is to allow people to ask questions or bounce ideas off of real people. Everything ever mentioned on any forum can be found with a quick google search. Then we lose out on real communication with real people.

If you are still working for the sponsored employer then change the 403b to Roth IRA contributions for the remainder of the year (assuming you can do that) and have no taxes withheld on the amount contributed. Then when you fill out your tax returns next year the credit will be applied to taxes owed but not withheld.

 

[rdunniii]

If you are still working for the sponsored employer then change the 403b to Roth IRA contributions for the remainder of the year (assuming you can do that) and have no taxes withheld on the amount contributed. Then when you fill out your tax returns next year the credit will be applied to taxes owned but not withheld.

Not Roth IRA, Roth 403b if they will let you do that.

 

[caronjeff]

Buy a used Volt 2011-2014's can be had for under $15,000

 

[palmtree]

Buy a used Volt 2011-2014's can be had for under $15,000

I thought about that but my wife would never go for a car that is strictly a 4 seater. We wouldn't use the middle rear seat very often but when we need it, we need it.

 

[BillG]

I put at least 15,000 miles per year on my cars. I'm afraid they would drop the hammer on me when the lease was over.

They won't "drop the hammer" on you if you buy the car at the end of the lease. There is no penalty for excess miles if you buy the car. Your purchase price is set up front, and includes the tax savings (or at least most of savings). AND you can negotiate with some lessors at the end of the lease for an even better price. Win/win. If you are planning on keeping the car long term, just consider leasing as another financing alternative that captures most of the tax savings.

 

[BillG]

I thought about that but my wife would never go for a car that is strictly a 4 seater. We wouldn't use the middle rear seat very often but when we need it, we need it.

Have you actually sat the rear of a Gen2 Volt? The 5th seating position is only for munchkins.

 

[DonC]

I put at least 15,000 miles per year on my cars. I'm afraid they would drop the hammer on me when the lease was over.

You can lease a car and have 15K miles included. It costs more than a 12K lease but not a lot more. Far less expensive than paying $2250 at the end of the lease for 9000 extra miles (at $.25/mile). Assuming as mentioned that you don't buy it.

The thing is, with electrics and tax credits, the costs of leasing and buying may not be that different. (Disclosure: I own both my cars at the moment).

 

[obermd]

Tax credits only apply to the original purchaser - used car resales do NOT qualify.

Some leasing companies will take this credit for themselves so you may not get it even on a new car that you lease.

Leasing is more expensive than putting the car on a credit card. Finance charges are computed using the old rule of 78s, which paid 78% of the interest before any principle would be paid. Bottom line from a financial point of view - don't lease unless you don't plan on keeping the car and have money to throw away.