I am planning to buy an EV that qualifies for the EV Tax Credit of 7,500. This year, I sold a rental property and have capital gains. Capital gains tax amount will be around 15K. I am checking if there is a benefit if I make the EV purchase before the end of 2023.
Can I use the EV credit to lower my tax payment overall?
TY
It's not whether you get a refund or tax due. And the withholding doesn't matter. It's if you have a tax liability on your income. Look at your 1040 line 22 for total tax. So as long as Line 22 is more than $7500 (before applying the credit), you can use the whole credit. It will reduce your income tax (but only to zero). If your non-refundable credits reduce your tax to 0 you will get back all the withholding and payments and any Refundable Credits. Unless you owe for something else like self employment tax or the 10% Early Withdrawal Penalty on IRA withdrawals.
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