If your income drops below the eligibility limit after purchasing an electric vehicle (EV), it does not affect the eligibility of the EV tax credit for that purchase. The eligibility for the EV tax credit is determined based on your income in the year you purchase the vehicle or the year before, whichever is less.
Here are a few key points to consider:
- Income Eligibility: For new EVs, your modified adjusted gross income (AGI) must not exceed $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for other filers.
- Credit Application: The credit is nonrefundable, meaning you can’t receive a refund for any excess amount beyond your tax liability. If your income drops after purchase, it does not change the fact that you cannot apply any excess credit to future years or receive a refund beyond your tax liability.
- No Retroactive Changes: Once you are eligible for the credit based on your income at the time of purchase, you do not lose eligibility if your income changes afterward. However, if you were not eligible because your income was too high, a subsequent drop in income would not retroactively qualify you for the credit.
In summary, a drop in income after purchasing an EV does not retroactively impact your eligibility for the tax credit you’ve already claimed, but it also doesn’t allow you to reclaim or increase a credit that was not initially eligible due to higher income at the time of purchase.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-happens-if-my-income-drops-below-the-eligibility-limit-after-i-purchase-an-ev/
