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I've been reading about the federal tax credit on different sites and I've seen conflicting reports about it and how it can be used with the 4xe.
Here's what I've been able to find. If there's anything I've missed please let me know below.
- If you don't want to wait until 2022 to get the $7,500 You can change your withholdings so that you get less money withheld from your paycheck during all of 2021 (Form W-4). So this way instead of waiting till early 2022 you could get this money throughout all of 2021. What you do is change your withholding allowances so that you get enough for as many paychecks as you have left for the rest of the year to come fairly close to $7500 by your last paycheck in 2021.
Here's what I've been able to find. If there's anything I've missed please let me know below.
- Yes it's really $7,500
- As long as you owe at least $7500 in tax you can take the full federal tax credit. To check, look at your 2019 tax return and look for the line that says “This Is your total tax“ (Line 16 on the 2019 1040)
- As long as your "total tax" is greater than $7500 you will get the full $7500
- If it's less than $7500 then you get a credit for whatever it is. For example, if you owe $5000 you can get a $5000 credit, if you don’t owe taxes then you don't get a credit.
- The tax credit will reflect on your 2021 taxes that you pay in early 2022.
- If you don't want to wait until 2022 to get the $7,500 You can change your withholdings so that you get less money withheld from your paycheck during all of 2021 (Form W-4). So this way instead of waiting till early 2022 you could get this money throughout all of 2021. What you do is change your withholding allowances so that you get enough for as many paychecks as you have left for the rest of the year to come fairly close to $7500 by your last paycheck in 2021.
