How does the $7500 EV tax credit work? A NX 450h+ bought Feb. 2022, I'd have to wait until 2023 tax filing for 2022 to get the $7500 tax rebate, right? I've heard Toyota is nearing the 200k threshold, but because the purchase was done prior to meeting this threshold my purchase would be eligible even if they run out before the end of year?

Thanks!

 

Your understanding is correct.

 

With the current push toward EV there is the strong possibility of more and even LARGER rebates for EV in the future, But you are correct, iy looks like the 450h+ rebate of $7,500 will probably run out well before year end 2022.

YMMV,
MidCow3

P.S. - Why you ask ? Because currently the average person cannot come close to the current high EV prices.

 

The credit phases out once the manufacturer reaches the limit in a given quarter. You get the rest of that quarter and the next quarter at full $7,500, then reduces to 50% for 2 quarters, then to 25% for 2 quarters. The language is "beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles...are sold".

So if Toyota didn't reach the 200K by 3/31, and reaches it by 6/30, then you can get the full $7,500 for any car bought by 9/30. Then you'd get $3,750 for 6 months, then $1,875 for 6 months. If they reached it by 3/31, then shift everything 3 months earlier.

 

Ummm it's not a REBATE it's a deduction for federal tax. You have to owe 7500 in federal tax and you deduct it from you taxes paid next year.

is it your understanding that the IRS send you a check???

 

Everything above is correct in terms of qualification and the breakdown.

However, when you do your taxes in 2023, doesn't the CPA just deduct 7500 from what you would have owed to the IRS OR.... is it that you pay and show proof and LATER they send you a check? I thought it's the former.

 

it’s a tax credit…you’ll get a check (auto deposit) in the form of a tax refund. There’s a form you file for it (8936).

 

My apologies I did say rebate and should have said credit. I am aware it is a dedication so you have to have had 7500+ in federal taxes paid to get the full 7500 in refund….

And I was fortunate to have successfully bought a 450h+ at the end of February. I was just not clear if I had to wait until 2023 filing for 2022 or if something now had to be done to meet eligibility before Toyota (Lexus) met the 200k threshold. Which just sounds like I need to be patient and just wait until filing 2022 taxes next year .

I am also curious to see if the I think 30% tax credit + electrician cost is extended for EV home charger credit is extended to 2023 (2022 taxes).

 

I don't mean to criticize but rather just to clarify...
A deduction reduces income, a credit reduces tax liability.

Also, tax liability is the total amount the government collects from the taxpayer. The amount the taxpayer owes or is getting as a refund when the tax return is prepared is not the same as the total liability, rather it's the difference between the total liability and how much has already been paid through payroll withholding by an employer or through estimated taxes paid by the taxpayer during the year.
Nonrefundable credits can reduce your tax liability to zero. Refundable credits can result in a refund if they are larger than your tax liability.

The $7,500 nonrefundable EV tax credit can be applied toward the total tax liability.

• Example 1: If your tax liability before the credit is $10,000, it will be reduced down to $2,500.
  • Part a: Say $6,000 was withheld from your wages during the year. Without the credit, you would owe $4,000 (or $10,000 minus $6,000). With the credit, you'll get a refund of your overpayment $3,500 (or $2,500 minus $6,000).
  • Part b: Say $2,000 was withheld from your wages during the year. Without the credit, you would owe $8,000 (or $10,000 minus $2,000). With the credit, you'll owe $500 (or $2,500 minus $2,000).
• Example 2: Assume you didn't have any tax withheld during the year and you didn't pay any estimated taxes. If your tax liability before the credit is $7,000, it will be reduced down to $0. No payment due. You will not get a $500 refund.

 

You calculate your Federal Tax amount due as normal, then you deduct $7,500 from that amount. If your total tax due is less than $7,500, you can only deduct the lesser amount. Tax credits are great as they're not income and just offset what you owe. You'll either pay the IRS less, or you'll get a bigger tax refund back than you would have, depending on how much you withheld. If you're getting the latter and don't use direct deposit, you'll get a check for the IRS, but that's just the normal refund process, this isn't a rebate.