Not enough federal tax liability!

[instantnet]

Previous taxes Federal Tax before deductions was $6041 after deductions $3159

I can afford to buy. Is the least a better deal for me since I don't have that much federal tax liability? In Oregon not sure of any other incentives for Oregon.

What is the buyback amount typically?

 

[LeftieBiker]

The leases are not structured for buying out, so I'd say that the $6k you'd get buying it would definitely be better than the $2500 CCR plus high residual (mid twenties or higher) you'd get if you leased.

 

[instantnet]

Well if last years deductions are the same as this years it was only 3k

 

[wwhitney]

Your statement about tax before and after deductions is confusing. In income tax language, a deduction is something you subtract from your taxable income before calculating your tax. Anything you subtract after calculating your tax is a payment or a credit.

So if the $3K are withholding or estimated payments, that is refundable, so you could get it back.

Also, you might consider strategies to accelerate future taxes to the current year, so that you don't waste any part of the $7,500 credit. If you own any appreciated stocks or market traded assets, you could sell some and repurchase them. That will cause your current gain to be recognized as taxable income and increase your basis so that your future taxable gain will be less. Or if you have a Traditional IRA, you could convert part of it to a Roth IRA, which will mean paying tax on the conversion amount now, but paying no tax when you withdraw from the Roth IRA.

Cheers, Wayne

 

[SparkE]

Your statement about tax before and after deductions is confusing. In income tax language, a deduction is something you subtract from your taxable income before calculating your tax. Anything you subtract after calculating your tax is a payment or a credit.

So if the $3K are withholding or estimated payments, that is refundable, so you could get it back.

Also, you might consider strategies to accelerate future taxes to the current year, so that you don't waste any part of the $7,500 credit. If you own any appreciated stocks or market traded assets, you could sell some and repurchase them. That will cause your current gain to be recognized as taxable income and increase your basis so that your future taxable gain will be less. Or if you have a Traditional IRA, you could convert part of it to a Roth IRA, which will mean paying tax on the conversion amount now, but paying no tax when you withdraw from the Roth IRA.

Cheers, Wayne

I *highly* recommend this (the bolded italics in the quote). It basically add X amount of dollars to your "earned income", so you move enough out of the traditional IRA to a Roth to generate a total tax liability for the year of (say) $7700. After your EV tax credit, you will only owe $200 - AND you will have $30-50,000 or so additional funds in a Roth IRA, which you can take out tax free later on (and which grow tax free in the meantime). I did this when my kids were going through college, and I got a $2000 tax credit for each of them. This was during the recession, and I invested in stocks that were solid companies, but had tanked in 2008 (like Apple). My Roth IRA more than doubled in 5 years - tax free.