Depreciation
Pole Position
Joined: Dec 2010
Posts: 2,799
Likes: 1,985
From: SoCal
Let’s say you owe $7,500 in federal taxes based on your adjusted income. And in your example, you had perfectly matched this and had $7,500 withheld from payroll or other estimated payments. You’ll owe $0 when you file because you made those payments throughout the year in some form or another.
Generally, any refund pertaining to credits are based on type. A non-refundable credit, such as the EV one being discussed, will give you no additional benefit and is basically lost in the above example. A refundable credit, such as a child tax credit, would be paid to you regardless of any remaining tax liability (final tax bill) in the form of a tax refund.
To take full advantage of any non-refundable credit, you would want to take steps to estimate your taxes early on, and adjust as needed. This may be as simple as reducing your payroll witholding. But it can get very complicated, due to income caps and other unique factors. Basically, consult a tax professional before doing anything with large credits to maximize the benefit or avoid misinterpreting eligibility and owing as a result.
I hope this is helpful or that I’m somewhat accurate, someone please stop me if not!
Generally, any refund pertaining to credits are based on type. A non-refundable credit, such as the EV one being discussed, will give you no additional benefit and is basically lost in the above example. A refundable credit, such as a child tax credit, would be paid to you regardless of any remaining tax liability (final tax bill) in the form of a tax refund.
To take full advantage of any non-refundable credit, you would want to take steps to estimate your taxes early on, and adjust as needed. This may be as simple as reducing your payroll witholding. But it can get very complicated, due to income caps and other unique factors. Basically, consult a tax professional before doing anything with large credits to maximize the benefit or avoid misinterpreting eligibility and owing as a result.
I hope this is helpful or that I’m somewhat accurate, someone please stop me if not!
There are penalties for not paying enough taxes throughout the year. So you potentially pay the penalty but get a $7500 credit. Makes no sense.
EDIT: It appears you're also wrong about this as I was the first time. This thread on reddit captures exactly what I was wondering. It seems like even if you paid taxes throughout the year, the $7500 will be refunded if you paid $7500 or more in taxes.
https://www.reddit.com/r/rav4prime/c...00_tax_credit/
Last edited by macmaster; Jan 13, 2023 at 09:32 AM.
Thread Starter
Pit Crew
Joined: Nov 2022
Posts: 229
Likes: 144
From: IL
So I was right the first time? So it is unfair. Doesn't seem right...
There are penalties for not paying enough taxes throughout the year. So you potentially pay the penalty but get a $7500 credit. Makes no sense.
EDIT: It appears you're also wrong about this as I was the first time. This thread on reddit captures exactly what I was wondering. It seems like even if you paid taxes throughout the year, the $7500 will be refunded if you paid $7500 or more in taxes.
https://www.reddit.com/r/rav4prime/c...00_tax_credit/
There are penalties for not paying enough taxes throughout the year. So you potentially pay the penalty but get a $7500 credit. Makes no sense.
EDIT: It appears you're also wrong about this as I was the first time. This thread on reddit captures exactly what I was wondering. It seems like even if you paid taxes throughout the year, the $7500 will be refunded if you paid $7500 or more in taxes.
https://www.reddit.com/r/rav4prime/c...00_tax_credit/
im not sure. I just talked to my uncle who bought a Mach E he didn’t apply for rebate since he didn’t owe any taxes with advice his from his consultant that he needed to pay taxes lump sum at EOY to apply. That could have changed tho this was in 2020.
Pole Position
Joined: May 2012
Posts: 2,242
Likes: 1,581
From: CA
That partially explains how they leapfrogged BMW on sales this year.
Depreciation does seem to have ramped up on my IS 350. I was able to break even on a sale or trade until recently. But, that's also because the car market is (slowly) stabilizing as chip shortage issues get resolved and demand has gone down.
Depreciation does seem to have ramped up on my IS 350. I was able to break even on a sale or trade until recently. But, that's also because the car market is (slowly) stabilizing as chip shortage issues get resolved and demand has gone down.
I agree with the other post that this is a rare car made for a niche customer and will have to sell private party for full value. We will probably get raked over the coals on a trade in.
Pole Position
Joined: Dec 2010
Posts: 2,799
Likes: 1,985
From: SoCal
"owe any taxes" - this is the phrase of confusion. If he had a W2 job like most people and paid income tax then he "owed taxes" regardless if he paid them throughout the year or at the end of the year. In either case he should've applied for the credit since he'd get the money from the taxes back.
Intermediate
Joined: Jul 2014
Posts: 321
Likes: 270
From: MD
Thread Starter
Pit Crew
Joined: Nov 2022
Posts: 229
Likes: 144
From: IL
You said rebate. I'm assuming you meant credit. Remember they mean very different things as I just learned this morning lol.
"owe any taxes" - this is the phrase of confusion. If he had a W2 job like most people and paid income tax then he "owed taxes" regardless if he paid them throughout the year or at the end of the year. In either case he should've applied for the credit since he'd get the money from the taxes back.
"owe any taxes" - this is the phrase of confusion. If he had a W2 job like most people and paid income tax then he "owed taxes" regardless if he paid them throughout the year or at the end of the year. In either case he should've applied for the credit since he'd get the money from the taxes back.
Many dealers who offer this 7500 whatever give you the money at the beginning and they deal with the IRS
Pit Crew
Joined: Jul 2014
Posts: 203
Likes: 431
From: CO
So I was right the first time? So it is unfair. Doesn't seem right...
There are penalties for not paying enough taxes throughout the year. So you potentially pay the penalty but get a $7500 credit. Makes no sense.
EDIT: It appears you're also wrong about this as I was the first time. This thread on reddit captures exactly what I was wondering. It seems like even if you paid taxes throughout the year, the $7500 will be refunded if you paid $7500 or more in taxes.
https://www.reddit.com/r/rav4prime/c...00_tax_credit/
There are penalties for not paying enough taxes throughout the year. So you potentially pay the penalty but get a $7500 credit. Makes no sense.
EDIT: It appears you're also wrong about this as I was the first time. This thread on reddit captures exactly what I was wondering. It seems like even if you paid taxes throughout the year, the $7500 will be refunded if you paid $7500 or more in taxes.
https://www.reddit.com/r/rav4prime/c...00_tax_credit/
ClubLexus Stories
Celebrating Lexus & Toyota from Around the Globe
Top 10 Lexus & Toyotas to Drive Before You Die!
Joe Kucinski
Top 10 Lexus/Toyotas With The LEAST 5-Year Depreciation
Joe Kucinski
Lexus LC500 Convertible Auction: A Preview of Rising Values?
Brett Foote
GX 550 vs TX 550: Best 3-Row Luxury Lexus Family Hauler
Michael S. Palmer
9 Best Lexus Models You Can Buy for Half Price (And 1 You Shouldn't!)
Joe Kucinski
2026 Lexus NX Buyer's Guide: Models, Features, Prices & More!
Brett Foote
Top 10 Reasons to Buy a Lexus TX 550h+ (& 3 Reasons to AVOID!)
Michael S. Palmer
Top 10 Lexus & Toyota Models of the 1990s RANKED!
Joe Kucinski
10 Great Toyotas That Could Have Been Lexus Models
Joe Kucinski
Advanced
Joined: Dec 2021
Posts: 556
Likes: 843
From: ID
Honestly feels like Teslas and perhaps other EVs will go the way of iPhones … everyone wants the latest version with the newest tech and the 3-4yo ones really lose their value.
Obviously a Tesla won’t be worthless but betting depreciation on Teslas in particular will drop faster than ICE vehicles (and maybe even other EVs) as those of a particular political leaning are starting to refuse to buy any products associated with Elon Musk and other manufactures will continue to get better & better at making EV products on par or better than Teslas.
Obviously a Tesla won’t be worthless but betting depreciation on Teslas in particular will drop faster than ICE vehicles (and maybe even other EVs) as those of a particular political leaning are starting to refuse to buy any products associated with Elon Musk and other manufactures will continue to get better & better at making EV products on par or better than Teslas.
Pole Position
Joined: Dec 2010
Posts: 2,799
Likes: 1,985
From: SoCal
Honestly feels like Teslas and perhaps other EVs will go the way of iPhones … everyone wants the latest version with the newest tech and the 3-4yo ones really lose their value.
Obviously a Tesla won’t be worthless but betting depreciation on Teslas in particular will drop faster than ICE vehicles (and maybe even other EVs) as those of a particular political leaning are starting to refuse to buy any products associated with Elon Musk and other manufactures will continue to get better & better at making EV products on par or better than Teslas.
Obviously a Tesla won’t be worthless but betting depreciation on Teslas in particular will drop faster than ICE vehicles (and maybe even other EVs) as those of a particular political leaning are starting to refuse to buy any products associated with Elon Musk and other manufactures will continue to get better & better at making EV products on par or better than Teslas.
Thread
Thread Starter
Forum
Replies
Last Post
Toys4RJill
Car Chat
171
Jan 11, 2018 06:55 AM