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I usually get a refund at the end of the year instead of owing the IRS, so does this mean the IRS credit for the purchase of a new volt does nothing for me?
 

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No. It's not a credit based on how much tax you paid, it's based on how much tax you owe. For example, assume you owe $9000 in taxes and you've paid $12,000 as estimated payments. Without the credit your refund would be $3000. With the credit your refund will be $10,500. If you owe $7500 and you've paid nothing in estimated taxes, without the refund you'd owe $7500 at tax time but with the credit you'd owe nothing. On the other hand, if you only owed $5000 in taxes, and paid nothing, you'd still owe nothing but you wouldn't get a refund -- $2500 of the credit couldn't be used.

HTH
 

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I usually get a refund at the end of the year instead of owing the IRS, so does this mean the IRS credit for the purchase of a new volt does nothing for me?
As DonC says, it's a credit based on your tax liability, regardless of what you've paid in estimated taxes or had withheld from your paycheck.

You get a credit UP TO your total tax liability. They won't pay you more in cash and you can't carry any extra over into the next tax year.

As a retiree living on Social Security and pensions, my tax liability for 2017 would be less than $3000, but I want to buy a Volt this year. It will make sense for me to withdraw money from my IRA, which is taxable income, this year. This way I'll be able to get the full credit and essentially withdraw the money tax free. If I withdraw the money later, I'll pay tax on it AND I'll have to pay more tax on my Social Security income.

The other alternative is to lease. If I lease, the leasing company--not me--gets the tax credit. If the leasing company knocks $7500 off the price of the car, passing the tax credit on to me (as Nissan did with my LEAF), that would get me the credit, even if I would only qualify for $3000 or so by purchasing. Of course, then I'd pay several hundred dollars in leasing fees....

Jan
 

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As others have said:

Don't confuse Withholding (from you paycheck) with Tax Liability.
 

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The other thing to remember, if you purchased a volt in 2017, you won't be able to apply for the tax credit until Jan 2018. But you can adjust your witholdings right now, shut them completely down, collect up an extra $7500 in your bank account, then turn it back on. Why give Uncle Sam a 0% loan for well over a year. Plus if you are always getting a refund at the end of the year, you should be adjusting. Your withholdings anyway. Any interest in a bank or a mutual fund is better than letting Uncle Sam hold it for you - especially in this day an age where tax refund fraud is on the rise and folks are getting hit with someone else fraudulently submitting a tax form for you, taking the refund, and putting you through about a year-long agony to fix it (the IRS is really slow about this).
 

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Also, I found out that if you get the full $7,500 credit for the Volt, you can't get anything more from the Feds if you installed an EV charging station. :-(
 

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Also, I found out that if you get the full $7,500 credit for the Volt, you can't get anything more from the Feds if you installed an EV charging station. :-(
I too did not get the EVSE 30% off deal...something to do with alternative minimum tax. Next time, do the EVSE in a different tax year. Luckily I did get a 50% for deal for the EVSE from the State, just before they suspended the plan.
 

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The other thing to remember, if you purchased a volt in 2017, you won't be able to apply for the tax credit until Jan 2018. But you can adjust your witholdings right now, shut them completely down, collect up an extra $7500 in your bank account, then turn it back on. Why give Uncle Sam a 0% loan for well over a year. Plus if you are always getting a refund at the end of the year, you should be adjusting. Your withholdings anyway. Any interest in a bank or a mutual fund is better than letting Uncle Sam hold it for you - especially in this day an age where tax refund fraud is on the rise and folks are getting hit with someone else fraudulently submitting a tax form for you, taking the refund, and putting you through about a year-long agony to fix it (the IRS is really slow about this).
My advice would be to let it alone. The "tax free" loan isn't worth much with today's interest rates, and people find it much easier to save a large lump refund than small additional amounts a month. Nothing wrong with your analysis, just that the return isn't worth the opportunity cost.

Also, I found out that if you get the full $7,500 credit for the Volt, you can't get anything more from the Feds if you installed an EV charging station. :-(
Where did you learn this? AFAIK it's not true. You can use both tax credits in the same year. I can imagine some specific circumstances where this would be true, but as a general matter the credits are independent.
 

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The $7500 credit is only dependent on your tax liability, as long as it's $7500 or more you get the full credit. The 30% EVSE credit goes away if you are subject to AMT. AMT is pretty hard to avoid if you live in a state with an income tax.
 

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The $7500 credit is only dependent on your tax liability, as long as it's $7500 or more you get the full credit. The 30% EVSE credit goes away if you are subject to AMT. AMT is pretty hard to avoid if you live in a state with an income tax.
I got hit with AMT, but I think the cause was because my employer pays me too much. But I'm not about to ask for a pay cut just to avoid AMT.
 

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I got hit with AMT, but I think the cause was because my employer pays me too much. But I'm not about to ask for a pay cut just to avoid AMT.
The "problem", as it were, is that, while the electric vehicle credit is not subject to the AMT, other credits, such as the EVSE credit, are. Consequently if the electric car credits reduces your tax liability below that due under the AMT, the credits which are subject to the AMT are lost. This means that you can lose credits even if you would not ordinarily be subject to the AMT.

Has been discussed before but it's not obvious.
 

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My advice would be to let it alone. The "tax free" loan isn't worth much with today's interest rates, and people find it much easier to save a large lump refund than small additional amounts a month. Nothing wrong with your analysis, just that the return isn't worth the opportunity cost.
Too many Americans depend on the fed tax withholdings as their only means of saving money. This can be fixed quite easily by creating a second bank account and switching direct deposit to put the amount that normally arrives as a tax refund into that side account while putting the rest into a regular account. The advantage here is when an emergency comes, you have ready access to it instead of waiting for the tax refund.
 

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Discussion Starter #13
Thank you guys so much for all the info. Btw I set my taxes up that way years ago cause I'd rather not take the chances of owing. Pretty much the same reason I go unlimited voice/data.
 
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