# 2021 EV Tax Credit Question (ID.4)



## wallyyfm (May 8, 2007)

Hello All,

I've just sold my GLI and I'm probably going to buy the ID.4. I drove a 1st edition and while it's not a rocket ship it's quiet and comfortable.

A question about the EV tax credit (I searched but the question wasn't really addressed this way).

My question is about the "nonrefundable" explanation of this credit.

For example, if at the end of the year you have a tax liability of about $25k and you withhold at the higher single rate, you end up paying about $30k in taxes. This usually results in a tax refund of about $5k give or take. Does this mean if you bought this car and filed the 8936, you would actually receive a refund of about $12,500? 

Or since it's a _"nonrefundable"_ credit, you would have to already owe at least $7500 at the end of the tax year to fully realize the credit. The EV credit would be deducted from the "tax you owe" line? Problem is since I'm always overpaying, I always have a refund. I prefer the refund because I usually use it for projects and/or cars. If any tax people are out there, please chime in.

Also, if you think the ID.4 is corny I totally get it, but I invite you to check them out, they're pretty comfy, at least the 1st edition is.


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## Huey52 (Nov 10, 2010)

Good insight here: Volkswagen ID Forum

Excerpt:
"Changing your deduction does not change your tax liability. The tax liability is what you owe the IRS regardless if you get a tax refund or owe taxes at the end of the year. *Look at Line 24 on your Form 1040 - that is your total obligation for the year and that is the number that needs to be higher than $7,500 to get the full refund.*

If that number is lower than $7,500, there are ways to increase that number. The easiest is converting IRAs to Roth IRAs or selling stock if you have any. If you are still unsure you can get your liability over $7,500 than leasing is probably a better route as VW can take advantage of the full credit and pass it on to you.

Talking to your accountant is best as they can recommend how to proceed based on your actual situation." -TT97

Also:








Federal Tax Credit


Does anyone have any ideas on how to “owe” money to the government so I can take advantage of the ev federal tax credit? I know my wife and I won’t be owing the government anywhere close to $7500 for next year’s taxes. One idea I had was to have my Dad be on the title with me, as he pays a good...




www.vwidtalk.com





Excerpt:
"It’s not about owing $7,500 in taxes on April 15 (which results from an underpayment of taxes throughout the year). Rather, this type of credit directly reduces tax liability. *So long as you have paid (throughout the year) at least $7,500 in Federal income tax, then you are eligible for the full EV credit.* Keep in mind, however, that other credits may reduce your tax liability, and therefore could affect the actual amount of the EV credit you’re eligible to receive.

The majority of taxpayers who can afford an EV like the ID.4 will have tax liability far exceeding $7,500 for the year. However, it’s always best to consult with a tax professional or use one of several websites that help you determine eligibility for the EV credit, to be sure." -NBCGLX


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## wallyyfm (May 8, 2007)

Thank you, I think my confusion is about the nonrefundable part. What I did as a test is I went into my tax return for this year online and added an 8936 for a similar car with a $7500 credit. Sure enough my tax refund shot up $7500 (didn’t file anything just used the calculator). 

I can’t believe they just don’t say hey if line 24 is above $7500 you’re good. The things I’ve read say line 36, 63, etc. There are other people are putting out terrible advice in forums/YouTube.

Anyway I’m debating on the barebones pro or the 1st but I should be pulling the trigger this tax year.


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## wallyyfm (May 8, 2007)

Actually another question is, I don’t see a required retention time on here. As in, I could buy this thing and sell it the next day and still claim the credit? That’s crazy.


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## Huey52 (Nov 10, 2010)

True, the retention time is ambiguous at best. Although I'm sure the IRS would inform you upon audit, so some common sense still applies. 

btw: If you lease in some states there are dealerships that actually give you $7,500 off as an incentive and also to assist you in coming in under state rebate caps. This lowers the sales tax exposure as well. Win-win.
I bought, so the harder way in awaiting 2021 filing, but I did just receive my state's $2,500 cash rebate.  


wallyyfm said:


> Actually another question is, I don’t see a required retention time on here. As in, I could buy this thing and sell it the next day and still claim the credit? That’s crazy.


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## wallyyfm (May 8, 2007)

Yeah I’m on the fence about doing that. The lease that was offered to me was actually more expensive than me doing 72 months minus the 7500. The tax burden out here is only 4% so it wouldn’t be too bad. I thought they would incentivize the lease a little more but doesn’t appear that way.


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## wallyyfm (May 8, 2007)

Well it’s time to get mulch.


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## Huey52 (Nov 10, 2010)

Congratulations!!! Looks Great!! 

I too have now made many home center runs and the cargo volume has nicely absorbed it all.
btw: I got the full length Muddy Buddy cargo liner (thru VW but made by WeatherTech) and that has worked well. I did install some add'l velcro to assure no sag of the rear seatback portions when in their normal upright positions.

Of course given the white steering wheel I'm careful to clean my hands after loading. But then the hand sanitizer has become a habit these days anyway and readily available.


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## wallyyfm (May 8, 2007)

So far I’m impressed. Especially with night driving.


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## RedHotFuzz (Nov 16, 2015)

wallyyfm said:


> Actually another question is, I don’t see a required retention time on here. As in, I could buy this thing and sell it the next day and still claim the credit? That’s crazy.


Yes, but a buyer is going to give you $7,500 less than what you’re hoping to get. Otherwise they’d just go buy themselves a new one and get their own $7,500 tax credit.


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## wallyyfm (May 8, 2007)

You would think that but I didn’t plan to sell my GLI for a profit because there’s no inventory. The world is upside down.


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## saalto (Jan 15, 2021)

wallyyfm said:


> You would think that but I didn’t plan to sell my GLI for a profit because there’s no inventory. The world is upside down.


I'm in a similar boat right now, I bought a 2020 GLI S Manual 6 months ago. Dealers will buy it on the spot for what I paid for it, so basically I drove it for free.

My wife already has an e-Golf that we leased, but we love it so much that another full electric vehicle is definitely on the table for our next car. We might even consider buying our Golf off lease which normally I wouldn't consider but we have extremely low miles on it and the residual value they set was very low.

How do you like your ID.4 so far? A friend of mine bought one after having an e-Golf as well, so I'm pretty convinced I'm going to sell my GLI and get one.


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## 20AE3600 (Jan 13, 2004)

wallyyfm said:


> Hello All,
> 
> I've just sold my GLI and I'm probably going to buy the ID.4. I drove a 1st edition and while it's not a rocket ship it's quiet and comfortable.
> 
> ...


I also typically over-withhold and purchased an ID.4 To avoid a very large refund check that may trigger additional scrutiny of my returns, I made a mid year adjustment on my withholdings using the IRS Withholding Estimator


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## 20AE3600 (Jan 13, 2004)

wallyyfm said:


> View attachment 90147
> Well it’s time to get mulch.












Fantastic mulch hauler. (3yds)


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