Do I have to owe 7.5k at the end of the year to get the 7.5k rebate? I don’t understand.
The federal new electric vehicle rebate is a one-time tax credit. Tax credits offset your taxes due (IRS 1040 line 24). If you didn’t owe $7500 in taxes, you lose the leftover credit.
On the flip side, Tesla’s aren’t eligible for the $7500 rebate because they’ve sold enough. Here is the list of vehicles eligible for rebate. [https://www.fueleconomy.gov/feg/taxevb.shtml](https://www.fueleconomy.gov/feg/taxevb.shtml)
EDIT: Many states have their own additional rebates that may have different rules. The car salesmen you’d talk to will definitely be yapping about it if you have that option. For example Texas has a $2500 flat cash rebate.
EDIT2: New rule making is underway and Tesla will probably be eligible for this rebate again soon.
You have to owe $7.5k in taxes to the IRS to claim the full refund. If you don’t have a refund then you get zilch. You can claim a partial refund if you owe less. All the money can be used for is to reduce your tax liability. You never get a check for $7.5k from the IRS. So, the only way to get full benefit is to reduce the amount deducted from your paycheck and owe money to the IRS at the end of the year.
Please refer to a tax professional for advice specific to your financial situation. This tax tip may not apply to everyone.
>Do I have to owe 7.5k at the end of the year to get the 7.5k rebate?
Not precisely. You have a *tax liability* by virtue of generating income, which is usually paid via automatic withholding out of your paycheck. The $7500 rebate offsets this tax liability, which very likely means that you’ll get that money back from the withholdings that your employer did.
It’s a tax credit so it goes against what you owe at the end of the year in taxes and it doesn’t roll over to the next year. If you don’t own at least 7.5k in federal taxes you will only get a tax credit for what you owe in taxes.