3 ms·

[Deleted]

• plexicle 8y ago
  You just described a deduction. A credit is literally cash (assuming you have enough liability to cover it).
  • Someone1234 8y ago
    [Deleted]
    • plexicle 8y ago
      "A tax credit reduces the taxable amount of income you owe taxes on" is not the same thing as: "Tax credits reduce the amount of income tax you owe" The former is a deduction. The latter is a credit. It's really that simple.
  • paxys 8y ago
    Certain tax credits apply even if you don't have enough liability. Like if you owe zero taxes for the year for some reason they will send you a check for the full credit amount. Not sure which category the EV one falls under though.
    • 2trill2spill 8y ago
      Yea your correct, theres refundable and non refundable tax credits, most are of the non refundable variety. It appears the ev tax credit is non refundable. [1]: https://www.libertytax.com/tax-lounge/electric-car-and-vehicle-tax-credit-what-to-know-and-how-to-claim-it/ https://www.libertytax.com/tax-lounge/electric-car-and-vehic...
• deleted 8y ago
  [deleted]
• evanpw 8y ago
  That’s a tax deduction. A tax credit of $X really is $X off your taxes owed.
• repiret 8y ago
  You appear to be conflating a credit with a deduction. A deduction reduces the amount of income thats taxed. So for example if you're in a 25% marginal tax bracket, deductions are worth 25 cents on the dollar. A credit reduces the amount of tax you owe, dollar for dollar. In addition, some credits are refundable, meaning that they're allowed to make your tax liability negative for the year, so you get benefit from them even if the credit is more than the taxes you would otherwise owe. And to be clear, when I talk about the "tax you owe", I mean the total amount of money you need to have paid the IRS by April 15th, including payroll withholding, estimated tax payments, and so on, and not the size of check you need to mail to the IRS in early April.