The EV Tax Credit is NOT correctly calculated by TurboTax!!!

Forum|Forum|2 years ago
March 27, 2024
1 reply
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I decided it was time to replace my aging '05 Nissan and buy a new 2023 Electric Vehicle.

I am retired and receive income from Social Security and a meager small pension.

For the past seven years, with such a low AGI, I typically owe zero Federal and less than $200.00 in Oregon state income taxes.

This would be exactly the same this year, if I had not purchased my new qualifying vehicle in November 2023, taking advantage of the $7,500 IRS EV tax credit.

To make the purchase, I withdrew $27,500 from my IRA Account and financed the remainder.

Using Form 8936 Clean Vehicle Credit, TurboTax correctly accounted for the $5,606.00 in additional Federal taxes from my IRA withdrawal, reducing my Federal Tax Burden to zero.

However, TurboTax is now calculating my Oregon state income taxes at a staggering $2,472.00! A much higher income level, as well as assessing a severe underpayment PENALTY with INTEREST and creating $661.00 QUARTERLY state vouchers for the 2024 taxable year...WHY???

Either something is seriously WRONG with how TurboTax is calculating this, or the EV Tax Credit is a huge government SCAM.

Any ideas?

Best answer by RobertB4444

Oregon doesn't have a clean energy vehicle tax credit to offset your tax bill. And your clean vehicle credit is only usable on the federal return. So the Oregon return is correct.

Oregon does have a rebate program. If you haven't taken advantage of it check it out here.

You can ignore the estimated payments for 2024. Your taxes should go back to where they were after this year so you won't have any issues unless you owe money next year.

@JiminOregon

RobertB4444Answer

Oregon doesn't have a clean energy vehicle tax credit to offset your tax bill. And your clean vehicle credit is only usable on the federal return. So the Oregon return is correct.

Oregon does have a rebate program. If you haven't taken advantage of it check it out here.

You can ignore the estimated payments for 2024. Your taxes should go back to where they were after this year so you won't have any issues unless you owe money next year.

@JiminOregon

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JiminOregonAuthor

Why am I hit with an underpayment penalty and interest?

DawnC

Employee

Because you did not pay estimated taxes for your retirement income. Did you enter any tax withholding from your 1099-R? The IRS levies underpayment penalties if you don't withhold or pay enough tax on income received during each quarter. Even if you paid your tax bill in full by the April deadline or are getting a refund, you may still get an underpayment penalty.

For federal underpayment penalties, you can visit that section of TurboTax. Search for penalty, and use the jump to link, to reduce or possible eliminate the penalty. You can annualize your income or apply for a waiver. Underpayment penalties

Each state return has its own penalty section in Other Tax Situations at the end of the state interview where you can possibly reduce or eliminate the penalty incurred.

Oregon Underpayment penalties -