I did some hefty 1099 work late this year and will owe on that. Starting a new job in March. Earnings will be significantly higher and, depending on the missus, we may no longer meet the income requirement. Not exactly sure how things will pan out tax wise, but that doesn’t really concern me now. I know for a fact that we’ll owe at least $10k on this year. As I intend to get an EV anyway, why not make use of the tax credit if I can, is the thought.
My understanding is that the tax credit offsets my tax liability by up to $7,500. So rather than pay that directly in taxes, I could apply it to offset the cost of a new, qualifying EV.
I feel foolish… Do I have that wrong?
Additionally, we do actually need another car in the near future. I’ve wanted to go electric for a while and we can handle the payments without issue. I just love a deal and know we personally meet the requirements this year.
Sounds like you’re misunderstanding what “owing” tax means (many people do, and IRS worded it stupidly in the first place).
Regardless, it looks like you can get one or more credits in 2022, and maybe in 2023 as well if your 2023 MAGI stays below $300k.
Doesn’t sound like it to me. OP was a 1099 in W2, and irrespective of Quarterly payments (hopefully they have been making those), whatever is on Line 37 (“Tax Owed”) is what they owe. The EV tax credit is a direct credit, so it reduces Tax Owed dollar-for-dollar. If you owe less than the credit, remember you can’t carry any of it forward — use or lose in the eligible tax year.
And it sounds like they expect to NOT be income eligible in 2023 — same here.
I’ve been a 1099 on and off since 2007, most recently the past 5-ish years. What they wrote makes sense to me.
If the EV tax credit isn’t viable, there is always a Section 179, and this is the last year for 100% accelerated depreciation (the latter not always as beneficial as the former). I actually made a spreadsheet for my aforementioned EV shopping that includes 179 eligibility and how it affects my tax liability.
If OP really wants to swing for fences and can find one, X5e is good for both (remember the EV tax credit reduces the base 179 deduction by itself).
Maybe the larger point I learned along the way, masked as a misunderstanding of calculating your taxes: be careful when spending $1 to save $0.30
Line 37 doesn’t matter. Line 24 (Total tax) matters. If Line 24 is above $7500, this taxpayer is likely eligible regardless of the withheld/prepaid amount. This is a very common misconception.
This! I hear so many small business owners, etc say oh I bought XYZ car, large item, etc because my accountant said I needed to, needed more write offs, etc - never understood that. I get it if you were going to be making the purchase anyway, but it often seemed like that wasn’t the case
I am in a somewhat similar position in that come January 1 my family won’t be eligible for any EV credit due to income limit. Also, my wife wants an EV for environmental reasons. Despite this we are not getting one. Even with the tax credit they are all just too expensive to be worth it. The comparable ICE vehicle is significantly cheaper although admittedly it is not as big a price delta in the non-luxury segment.
I just can’t see it making financial sense unless you have some significant non-financial motive such as environmental concerns or a strong desire to pay less in taxes even if it means:
I am in the same situation and I got lucky as my 2023 ID4 order arrived much earlier than expected. Since I’m in NJ, I also got $2K from the state incentive plus avoided any sales tax. I never bought new but saw it as my last chance since I would be ineligible moving forward. I love the ID4 and would definitely recommend trying to track one down. Also I’m using Interior CU to finance it at 1.99% thanks to this forum.
One other thing to keep in mind is used prices will be artificially inflated due to the new credit for used EVs. It does require the car to be under $25K but suspect used EVs pricing will hover around $18-20K vs continuing to drop so should be better depreciation-wise than an average car.
Good luck with your search! I heard of people finding cancelled reservations at MSRP for the ID4 on some of the VW boards but you would likely need to really broaden your search since you are in CA. It can’t hurt to ask to be put on a waitlist if they have one. Unfortunately, Pro S AWD models have primarily been what’s been delivered thus far so $50k+ MSRP.
SV plus Leafs are/were possible in SoCal (was toying with the idea a few days back and many dealers mentioned they could get MSRP or close to it due to being end of the month), the difference in MSRP between base (S) and the SV Plus is about 8k though so that’s probably the reason why you can still get them.
S $28,040, SV Plus $36,040
Some brokers can also get Pacifica hybrids (MSRP + brokerage fee) at the moment.
A big Hyundai dealer in Los Angeles is showing 21 Ioniq 5 models in stock and 30 in transit. So supply is building with demand decreasing due to no tax credit. Still showing blessings in online pricing, though.
You should definitely look into the Tesla model 3 RWD. It does not qualify for the tax credit right now. But Tesla just announced that they will give a $3750 price adjustment if you take delivery in December.
This put the Model 3 RWD right under $45,000. In my opinion, this is prob the best EV you can get right now for under 45k. If I had known this, I would have picked up a Model 3 RWD over the 330e!
Must be my error… I think I may have had AWD checked.
Looking through the list now… are the used 3s for less than $40k even a good deal if you can get a new 3 for around $43k?
Ys are still so expensive… cheapest used one is $61k (if I did it right)… got my RWD Y last year for $40k.
If the OP is going to buy an EV… I still think the Bolt EUV is good car for the no credit money, esp compared to the Leaf Plus for roughly the same cost with Fed credit.
