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1040 Line For Tax Credit?

Discussion in 'Off topic' started by Dan Detweiler, Feb 23, 2018.

  1. Dan Detweiler

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    I know this has been specified somewhere but I can find it with a normal search. Can anyone verify which line on the 1040 Federal Tax Form it is that has to be at least $7500 to get the full tax credit? Doing my taxes now and am managing to get myself confused...I know, big shock.

    Any help is much appreciated.

    Dan
     
  2. garsh

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  3. Dan Detweiler

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  4. garsh

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    In that case, I strongly suggest that you look into converting some of your 403b retirement savings into a Roth IRA. This will cause you to owe taxes on the converted money now (which you can offset this year with the EV credit), but allow you to take out that money tax-free later (with a 403b, you will owe income tax on the money you withdraw).

    https://www.fool.com/knowledge-center/can-a-roth-conversion-be-done-from-a-403b.aspx
    However, one of two conditions has to be met before you can do so. You must either be over 59 1/2 years of age so you can withdraw your retirement funds penalty-free at will, or you must no longer be working for the sponsoring employer.

    Do either of those two conditions apply to you?
     
  5. Dan Detweiler

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    I miss the age by 4 years and am another year away from retirement...crap. Oh well, it's only money, right? ;)

    Dan
     
  6. garsh

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    Have you worked for the same school (I'm assuming you are a teacher - feel free to correct me) the entire time? Or do you have another 403b from a previous employer?
     
  7. Dan Detweiler

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    Same school system since 1999.

    Dan
     
  8. garsh

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    Any retirement accounts from an employer before taking that job?
     
  9. Dan Detweiler

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    I think I rolled it over when I came to this system. I honestly don't remember!

    Dan
     
  10. Jasper

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    Question, If I am able to get delivery before the $7,500 gets cut in half and if my total Federal taxes taken out for the year from are $7,500 but after taxes are done say I get $2,000 back in Federal refund. Does that mean that I'd get the 2k back plus the $7,500 ?
     
  11. PNWmisty

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    The amount you had withheld is immaterial to the value of the tax credit. All that matters is whether you owed enough taxes to get the full credit. In your example above you only owed $5,500 in tax and that is the amount you would save by using the tax credit. Instead of a $2,000 check you would get all of the taxes paid back ($7,500). At least that is my understanding and I'm not a tax accountant.
     
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  12. Bokonon

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    Agree with @PNWmisty. Although you'd get a refund check for $7500, the numbers would actually work out like this...

    Federal tax liability: $5500
    Federal taxes withheld: $7500 (an overpayment of $2000)
    EV Tax Credit: $5500 (the lesser of your tax liability and $7500)

    Refund: $2000 overpayment + $5500 EV tax credit = $7500
     
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  13. Jasper

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    Ok, thank you very much. I really appreciate it. So basically I wouldn’t make enough to take full advantage of the $7,500.
    I ask because I was expecting to buy a 35k car when I sat in line for several hours on that first day over two years ago.
    I made two reservations and refunded one last week. Very easy by the way, you do it online and enter an debit card and it’s refunded in a few days. When I called Tesla they said the store has to do it and it takes 4-6 weeks until a check is mailed out, or refund to your initial card you made the deposit on.

    Anyways, I guess I’ll wait for the short range and at least get the $3,750 and $2,500 California rebates.
    I wonder if by the time the short range is produced there will be more al la carte items like a sunroof. I’ll really miss not having a sunroof anymore.
     
  14. SoFlaModel3

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    Just to clarify for you for sure — it’s based on your tax liability not a refund amount or an amount owed at the end of the year.

    If your liability for the year was $7,500+, you’ll get the full boat. If your liability was less than the credit maxes out at your tax liability.

    If you get a refund of $2,000 and then tack on the full credit, you’d get a $9,500 refund.

    I’m not a tax accountant, but I try not to give out $2,000 interest free loans ;)
     
  15. Jasper

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    OK, so to be exact, I just looked at my last year taxes and the Federal taxes I paid was $6,304 and my refund was $804. So if I'm thinking correctly, does that mean if the $7,500 was still available I would take $5,497 advantage out of it ?
     
  16. garsh

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    Correct.

    Definition: US Federal Tax Liability
    Your tax liability is the total amount of tax on your income.
    ...
    Your federal tax liability amount is found on Form 1040 (line 63), Form 1040A (line 39), and Form 1040EZ (line 12).​
     
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  17. Kizzy

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    Refund of $5,500 based on last year's taxes (using the numbers you provided).
     
  18. NOGA$4ME

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    Yes, if you pay exactly the same amount in taxes for this year. Which, implies that maybe there is a strategy you could use to increase your tax liability for this year. Do you have some appreciated assets you could sell for a gain (and be taxed on) to take advantage of more of the tax credit? This would literally be like free money. There are other strategies you could use to generate taxable events (such as rolling over certain types of retirement accounts into others). I will refrain from being more specific as I'm not a tax advisor or accountant, but it might be worthwhile to have a discussion with a pro to devise a strategy where you can take full advantage of the tax credit.
     
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  19. Brokedoc

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    I apologize if I'm making incorrect assumptions but your profile shows that you're in Tucson. Isn't that Arizona? You can't take the California rebate.

    Also, with a tax liability that low, the most common reason is because you have limited income. There are other reasons like crazy deductions but if you have limited income, it would make more financial sense to not stretch yourself to get a car with pricey options that aren't really necessary. It sounds like you're OK with the standard range battery so spending $9000 to get $1750 more tax credit doesn't sound reasonable (If your annual federal tax liability is only $5500).
     
  20. Long Ranger

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    When you say "Federal taxes I paid was $6,304" it's not clear to me which line of your tax return you are referring to. If it's one of the lines mentioned by garsh (called total tax) then you'd get $6304. If you are referring to a line called "total payments" then you'd get $6304-$804=$5500, and you should also see that the total tax line was $5500. In either case, the only line on the tax return that matters is your total tax.
     
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