Does ADM count against $80k limit on tax credit?

[TaxmanHog]

However, if one has a tax liability of $6,000 (that is, less than $7,500) and paid $5,000 toward that liability, via wage deductions, then at filing time there would be a balance owed of $1,000. In this scenario, since the tax liability is less than $7,500, only the amount up to the tax liability can be allowed. The EV credit would completely reduce the $6,000 liability, making it $0. The remaining $1,500 of the EV credit is not allowed. Since $5,000 was already paid via wage deductions, there would be a refund due of $5,000.

There is no carry forward or backward of the unused credit of $1500, use it or lose it.

All your other scenarios are accurate, but I like to reiterate for any one who is self employed that Self Employment taxes are outside the calculation.

 

[frunk]

For individuals, the credit can only be used to offset a taxpayer’s tax liability in the current tax year (i.e., there is no carryback or carry forward). The credit is nonrefundable, meaning the amount of the credit cannot exceed a taxpayer’s tax liability.

 

[Whitetiburon]

Say you want to purchase the lariat for $79k, but the dealer ADM is $2500, putting your purchase price at $81.5k. Does that disqualify you from the tax credit?

The current rebate does not have a price limit on the vehicle. Your rebate is based on your tax liability. If you owe 5k in taxes you get that much in credit. Plain and simple. The new build back better plan sets a limit on MSRP to 80k so Ford was very smart in lowering the cost the lightning w/extended battery to $79k just under the max allowing most buyers to get the rebate and with this new BBB program the 200k limit is removed! Hope congress can get this through.

 

[frunk]

I am retired so I never owe any Tax. So, what i am going to do is take money out of my IRA and witch I will have to pay the tax on and put it in a Roth Ira where it can earn interest tax free. I can us the $7500 EV tax credit to pay the tax on the money I take out.
When you reach 72 years of age, they make you take out (RMD) so much each year and pay the tax on it.

 

[TaxmanHog]

I am retired so I never owe any Tax. So, what i am going to do is take money out of my IRA and witch I will have to pay the tax on and put it in a Roth Ira where it can earn interest tax free. I can us the $7500 EV tax credit to pay the tax on the money I take out.
When you reach 72 years of age, they make you take out (RMD) so much each year and pay the tax on it.

Depends on several variables please do not share publicly, you can send me a PM or talk to your financial planner or accountant for personal specific!!!!

What you need to consider

• Filing status (married joint / separate) or Single
• Current income [SSA, other pensions that are paid but currently below federal tax threshold]
• Spouse income if married.
• Appx value of what you intend to draw out or roll over which will optimize the income tax liability upon which you could apply the $7500 credit.

Two options:

Roth conversion, read more about it or talk to a local advisor before you do this, a large tax bill could result, conversion does not mean distribution unless you wish for a portion to be cash in hand and the remainder rolled into the Roth.
https://www.investopedia.com/articles/retirement/08/roth-conversion-2010.asp

Partial withdrawal

• Determine an amount to generate a taxable income and total income tax to absorb all your EV Credit.
• Hopefully you're over age 59.5 avoiding the pre-mature distribution tax (penalty), please note the EV Tax credit can not pay this portion of liability!
• The partial withdrawal will probably have a base 10% set aside for projected income taxes, so cash in your pocket my be only 90% of what you request, they might also hold a percentage for state depending on how your state treats IRA distributions.

 

[Whitetiburon]

Say you want to purchase the lariat for $79k, but the dealer ADM is $2500, putting your purchase price at $81.5k. Does that disqualify you from the tax credit?

If you read the language in the law, it says manufactured suggested retail price. That means Fords price offer not the dealers. That why I think ford priced the lariat right below 80k because I believed they knew that was the one that was going to sell the most and give most people a tax rebate. Just my thought.