My memory of reading the irs website is that you get one shot at your $7,500 tax credit in one year. You don't get any carryover to another year. If you do not have $7,500 in tax liability you only get the amount of tax you would have owed for that year. You must take DELIVERY of the vehicle in the same year you claim the credit.So I have 2 reservations. One premium and a gt. If I buy the Premium below the $60k mark and get the 7,500 fed credit and the 2,000 PA state credit, can I trade it in 3-5 months later on the GT and get the Federal 7,500 credit again? Assume I have enough taxes to use the credits.
Buying a new car is not smart economics...we are past that point.@Plutoman15 - i don’t understand your need to get the first Mach e if you really want the GT. Why take a loss at all, it’s not smart economics.
In general yes. But depends on car and popularity. I know when I got my mini cooper 10 years (more!) ago ..the waiting list was so long you could drive it off forecourt and immediately sell it for at least 5% more than what you paid new.Buying a new car is not smart economics...we are past that point.
Go to irs.gov and download “Instructions for Form 8936” and “Form 8936”. It explains most everything. It looks like you could claim credits on two vehicles, but you are still limited to $7,500 maximum credit and both vehicles would have to be put in service during that year. The IRS wants the VIN numbers. They is no carryover of unused credit to the next year allowed.In short, the credit works like this correct? I'm going to list a couple scenarios just so I get it right. Also, I'm making it rather simplistic but this keeps it logical and makes the math easy to follow.
$10,000 withheld for my federal taxes throughout the year
$1,000 owed at end of year after doing taxes typically (before the $7,500 credit)
After the $7,500 credit would mean that I would get a refund for $6,500
$10,000 withheld for my federal taxes throughout the year
$1,000 refund owed to me at end of year after doing taxes typically (before the $7,500 credit)
After the $7,500 credit would mean that I would get a refund for $8,500
yes. the credit is a deduction from the amount of money of yours that Uncle Sam is entitled to have. The scenario you didn't mention is If you had $3000 deducted from your pay and the amount you owed would have been $5000 without the car credit (ie the amount of your money the IRS was supposed to get before you bought the car is $5000), you would get back your $3000 deducted from your pay and nothing more.In short, the credit works like this correct? I'm going to list a couple scenarios just so I get it right. Also, I'm making it rather simplistic but this keeps it logical and makes the math easy to follow.
$10,000 withheld for my federal taxes throughout the year
$1,000 owed at end of year after doing taxes typically (before the $7,500 credit)
After the $7,500 credit would mean that I would get a refund for $6,500
$10,000 withheld for my federal taxes throughout the year
$1,000 refund owed to me at end of year after doing taxes typically (before the $7,500 credit)
After the $7,500 credit would mean that I would get a refund for $8,500
Ah yes, I forgot that scenario if your tax liability was less than $7,500 for the year. Thanks!yes. the credit is a deduction from the amount of money of yours that Uncle Sam is entitled to have. The scenario you didn't mention is If you had $3000 deducted from your pay and the amount you owed would have been $5000 without the car credit (ie the amount of your money the IRS was supposed to get before you bought the car is $5000), you would get back your $3000 deducted from your pay and nothing more.
That is a good tip. Even if not retired, if you have a retirement 401k from your job, often it is setup as as a pre-tax (traditional) account. You can convert funds from this to a roth 401k in order to increase your taxes (and pay less taxes in retirement).My memory of reading the irs website is that you get one shot at your $7,500 tax credit in one year. You don't get any carryover to another year. If you do not have $7,500 in tax liability you only get the amount of tax you would have owed for that year. You must take DELIVERY of the vehicle in the same year you claim the credit.
I plan to create an additional tax liability (I'm retired) by rolling over a traditional IRA to a Roth IRA thereby creating additional taxable income. So I need to know if Ford will sell me my vehicle in 2020 or 2021 before I do that. I think each person has to plan their own strategy to take full advantage of this credit.
For a Mustang Mach-E used 100% for personal use, Form 8936 only takes into account your tax liability and tax credits. It uses line 12b for liability, and other forms for credits. (This roughly equates to line 16 "total tax" for most of us.) Taxes withheld from paychecks has no impact on this.If you had $3000 deducted from your pay and the amount you owed would have been $5000 without the car credit (ie the amount of your money the IRS was supposed to get before you bought the car is $5000), you would get back your $3000 deducted from your pay and nothing more.
Yes, I know that the credit is against tax liability and not directly related to withholdings. I was formulating an additional example phrased similarly to the post I was responding to. The intention was to illustrate that the credit can only reduce your tax liability to 0 - one will not get a "rebate" of the balance of the credit beyond that. Which means that the most one can get back is the total amount of one's withholdings and nothing more.For a Mustang Mach-E used 100% for personal use, Form 8936 only takes into account your tax liability and tax credits. It uses line 12b for liability, and other forms for credits. (This roughly equates to line 16 "total tax" for most of us.) Taxes withheld from paychecks has no impact on this.