We unknowingly purchased a new Equinox EV from a dealership that isn’t registered with the IRS to offer the $7,500 federal tax credit at the time of sale. Unfortunately, our low-income family (AGI $25,000, married with 4 kids) doesn’t have much tax liability, meaning we won’t benefit much from claiming the credit on our tax return. We discovered this issue a week after buying the car. Are we out of luck?
I’m feeling guilty because I sent my wife to handle this alone, and she wasn’t in a position to fully understand the details. Is there any recourse for us? Thank you for your advice.
The credit applies to your total annual federal tax liability, not just the amount owed at the end of the year. However, if your liability is low, the credit might not help much. Consider consulting a tax professional to explore your options.
If the dealership didn’t apply the credit at the time of sale, you can still claim it when filing your taxes, provided the car meets IRS qualifications. However, since your AGI is $25,000, you likely have little or no federal tax liability, so you wouldn’t benefit from the credit.
Out of curiosity, how did this purchase fit into your budget with your income level?
@Parker
I agree it’s a tight budget. This was a carefully planned purchase with some help from extended family, but I should have been more involved in verifying the credit.
The EV tax credit is non-refundable, meaning it can only offset your tax liability. If you owe little or no taxes, you won’t get the full benefit. Since the dealership isn’t registered with the IRS to offer the credit at the time of sale, you might not have any recourse for this purchase.
Make sure to check whether the dealership provided you with the required IRS time-of-sale documentation. If not, the vehicle might not qualify for the credit at all.
You might consider taking legal action against the dealership, especially if they didn’t properly disclose their inability to offer the tax credit. If there are others in your situation, you could explore a class-action lawsuit.
You can still file for the EV tax credit at the end of the year using IRS Form 8936. However, since the credit is non-refundable, it’s better to apply it at the point of sale if possible. Unfortunately, it sounds like you won’t benefit much due to your low tax liability.
@Reagan
Exactly. Non-refundable credits are most useful to people with higher tax liabilities, so getting the $7,500 at the time of sale is generally more advantageous in situations like this.