Tax credit
 

If you normally come up even (no payment and no return) on taxes. Would the tax credit be a Tex return? Can someone explain to me please I want to make sure that I’ll get the tax return.


thank you in advance

Most likely your refund will go up by this amount. Let’s say you make 100k and your taxes are 25k and your withholding is 26k. Normally you’d get a refund of 1k. With this credit, your taxes would be 17.5k (25 less the 7.5). Your withholding is still 26k so you’d get back 8.5k.

Perfect, thank you for this very easy to understand explanation.

Some people with high income AND expenses may not qualify for the entire credit, which is classified as Non-refundable. That means it is limited to the lesser of your Federal tax liability on line 15 of your 1040 or the $7,500. So if you have $100K in income and $40K in itemized deductions, your taxable income will be $60K and the tax liability on that (if married) will be about $6,800. Your credit will be only $6,800. You'll still get all your withholding back, which was always your money anyway, and you lose out on $700 of the credit.
So in this situation a person can do a couple of things to "increase" income. One is to move income into this year, which would otherwise be received in 2020. The other is to delay paying certain itemized deductions and cash-basis self-employment or real estate rental expenses, etc. into January.

🙏 thanks

Anything special we need from the dealer to claim the tax credit?

All you need is the vin for Form 8936

Don't forget about a possible state credit. Colorado gives a $5,000.00 credit against its state tax. Here is a list of all state BEV credits: https://www.clippercreek.com/ev-incentives/

California gives $2,500 but the fund is currently exhausted. It's likely to get topped up though so don't hold off on submitting forms as you go into a waitlist and it's first come first served.