Usually get refund. How should i prepare for EV credit?

[broncoaz]

You can have some of my tax bill, I have plenty for both of us.

Me too ?

Sponsored

 

[Zyvin]

Get back “a few grand”, wtf.

 

[broncoaz]

Get back “a few grand”, wtf.

Yep, just means someone overpaid for the year and gave uncle sugar a free loan.

 

[Maquis]

Yep, just means someone overpaid for the year and gave uncle sugar a free loan.

I hate it when that happens!

 

[jazzmanmonty]

Get back “a few grand”, wtf.

Ya, i don't feel like writing a check to uncle Sam every April, so i try to balance out my withholdings best i can i so i don't have to do this, but also don't go crazy like others give uncle sam alot of interest free cash to pay for a senator's lunch. My numbers change every year with kids, new tax laws, etc. ...anyway. Thanks for the insight guys. I like the tips and clarification of how things work.

 

[TaxmanHog]

.....I was thinking the simplest way would just to decrease federal withholding down to $0 and put aside the amount that is currently being withheld, then just pay up the difference that way. But that takes too much financial discipline and don't want to think about it every 2 weeks.

This might trigger your employer to seek a review of your EXEMPT / 0$ withholding request on the W-4 by the IRS, OTOH they might not if they fully understand your intentions.

Several folks have already given you good ideas and parameters to predict how much to factor down your tax withholdings, bi-weekly starting the following pay period would leave ~24 more periods~ to recover the value of the EV credit, while you're doing this I support optimizing to a net ZERO (no refund, No Balance due) condition, but that takes tenacious discipline to monitor your financial condition.

If you find this too risky, let the current withholdings stand and enjoy a good sized refund next spring, nice family vacation or make a big extra paydown on the financing note for your new truck

{Helpful advice from a retired Revenue Officer}

 

[Maquis]

This might trigger your employer to seek a review of your EXEMPT / 0$ withholding request on the W-4 by the IRS, OTOH they might not if they fully understand your intentions.

Several folks have already given you good ideas and parameters to predict how much to factor down your tax withholdings, bi-weekly starting the following pay period would leave ~24 more periods~ to recover the value of the EV credit, while you're doing this I support optimizing to a net ZERO (no refund, No Balance due) condition, but that takes tenacious discipline to monitor your financial condition.

If you find this too risky, let the current withholdings stand and enjoy a good sized refund next spring, nice family vacation or make a big extra paydown on the financing note for your new truck

{Helpful advice from a retired Revenue Officer}

There are also scenarios that can result in penalties of your withholding is insufficient. I wouldn’t drop to zero withholding without consulting a tax professional.

 

[jefro]

The final tax line is the only issue at play. If you expect it to be above $7500.00 then do nothing.
You will get a visit from the IRS is you try a stunt like not paying at all. The only way used to be claim 23 dependents.

This also will assume there will be that much of a tax credit when you take delivery. Since you are a cash basis you may need to look real close at the limits for that credit. Might see if you can actually buy it earlier to get that credit. If Ford keeps selling Mach-E's no F150 might get the credit.

 

[TaxmanHog]

Might see if you can actually buy it earlier to get that credit.
If Ford keeps selling Mach-E's no F150 might get the credit.

That's my biggest concern, is how long the full credit stands in relation to delivery of units this year, sure some Lightning buyers will be covered in full, but if phase out starts sooner than projected then we have issues should folks shorted withholdings or estimated tax deposits.

I'm hopeful that does not come to be and folks taking delivery at the tail end of 2022 still have the full value of the credit per their financial situation.

Planning strategy for individuals needs tenacious monitoring, status of the credit and personal financial matters best reviewed privately with an accountant outside this forum

 

[SmoothJ]

My order is in for the F150L, but if that BBB does pass, I will be screwed cause the truck is over 80K. In some ways, I am counting on it since I will have some capital gains this year and that 7500 would help towards that. However, I am not depending on it, but obviously it would help.

 

[dothedew]

Hi all - accountant/tax accountant/auditor/nerd here. For an F-150 forum most of you really know your stuff and its pretty impressive. I've purchased several electric cars: Fusion Energi, Two Teslas and claimed the state (Colorado) and Federal tax credits for each of these purchases.

It's spot on that the current credit is a $7,500 cut off your tax liability (line 24 on schedule 1040). If you have > $7,500 in that box you will get the full credit (assuming it hasn't started to phase out).

The challenge people don't understand is how it impacts your refund when factoring in withholdings from regular paychecks if you have a W-4 job. It's specific to each person's tax situation, but as long as you have enough tax liability you will get the full credit applied to your return.

The final tax line is the only issue at play. If you expect it to be above $7500.00 then do nothing.
You will get a visit from the IRS is you try a stunt like not paying at all. The only way used to be claim 23 dependents.

This also will assume there will be that much of a tax credit when you take delivery. Since you are a cash basis you may need to look real close at the limits for that credit. Might see if you can actually buy it earlier to get that credit. If Ford keeps selling Mach-E's no F150 might get the credit.

Just like to clarify here - and you made me LOL - the IRS does not give a damn if you file exempt on your W-4 and don't pay your regular withholdings throughout the year. Why? Because they tack on a penalty at year end. There is absolutely 0 chance the IRS is going to visit someone or even mail anything to someone adjusting their withholding to account for an EV car credit. They have bigger fish to fry.

Additionally, I would research how the credit phases out. In particular, when Ford hits 200K cars produced that are eligible for the credit, it begins to phase out over 6 quarters (1.5 years) - two at full amount, 2 at 50% of the max and 2 at 25% of the max. Tens of thousands of Lightnings will be eligible for the credit, without a doubt.

 

[dothedew]

That's my biggest concern, is how long the full credit stands in relation to delivery of units this year, sure some Lightning buyers will be covered in full, but if phase out starts sooner than projected then we have issues should folks shorted withholdings or estimated tax deposits.

I'm hopeful that does not come to be and folks taking delivery at the tail end of 2022 still have the full value of the credit per their financial situation.

Planning strategy for individuals needs tenacious monitoring, status of the credit and personal financial matters best reviewed privately with an accountant outside this forum

Ford is at 160,580 eligible EVs sold as of 12/31/21. For the full tax credit to not be available at any point this year they would need to sell 39,420 EVs by the end of March.

Most sites are predicting them to hit it in Q3 this year. So that would mean the tax credit would drop down to $3,750 in April 2023. and then to half of that in October 2023. and then it would be gone after April 2024.

 

[neririn]

I am curious. Are any of you seriously concerned about having enough income to afford to buy a Lightning (even pro model) yet not having enough income to have $7500 in tax liability? I know I sound like my Dad here, but if so I have a genuine question. Are you sure you can afford this truck?

 

[SmoothJ]

I am curious. Are any of you seriously concerned about having enough income to afford to buy a Lightning (even pro model) yet not having enough income to have $7500 in tax liability? I know I sound like my Dad here, but if so I have a genuine question. Are you sure you can afford this truck?

Affordability is not something people have in their mind when it’s something they want. That’s why car salesman try to get your emotions involved when buying.

A bit of back story. I have a 21 F-150 Lariat PB, and I love the truck but I just picked it up in December cause I needed a truck/ride. In reality just cause I have my F150L on order doesn’t mean anything till it’s ready to be picked up at the dealership. It could be delayed or even lost some place.

So now back to the question, my concern is not affordability but them being able to take the 2021 back without being upside down much and me putting enough $$ down to make sure the payments are comfortable. As it stands, if it’s an even trade… no issues. However if the market turns back to the way it was before the chip shortage and etc… I will be screwed and would need to walk away.

 

[Nick Gerteis]

I am curious. Are any of you seriously concerned about having enough income to afford to buy a Lightning (even pro model) yet not having enough income to have $7500 in tax liability? I know I sound like my Dad here, but if so I have a genuine question. Are you sure you can afford this truck?

If you have enough cash on hand your income is less relevant- you can still buy this truck (but nothing above XLT for me!). Unfortunately the income still is very much relevant for the full tax credit as discussed, therefore some of us have to get a little bit creative, as discussed.

Sponsored