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Good evening,

If I purchase a new 2020 Clarity, does it qualify for a Federal tax credit even though it's last year's model? Trying to figure this out. I understand that if it's considered used, the credit doesn't apply. I just don't know if a previous year's model still counts as new if it hasn't been sold yet.

Cheers,
Jeff
 

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Good evening,

If I purchase a new 2020 Clarity, does it qualify for a Federal tax credit even though it's last year's model? Trying to figure this out. I understand that if it's considered used, the credit doesn't apply. I just don't know if a previous year's model still counts as new if it hasn't been sold yet.

Cheers,
Jeff
As long as it is sold as new and you are the first registered owner then the model year doesn't matter.

You probably know this already but you have to have at least $7,500 in tax liability during the year of purchase in order to receive the full credit.
 

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Good evening,

If I purchase a new 2020 Clarity, does it qualify for a Federal tax credit even though it's last year's model? Trying to figure this out. I understand that if it's considered used, the credit doesn't apply. I just don't know if a previous year's model still counts as new if it hasn't been sold yet.

Cheers,
Jeff
Yes, Jeko44 is correct. I did the same thing with an '18 I purchased in '19. The tax form asks for the date it was "put into service" as I recall. BTW, if you don't have the total $7000 in taxes I'll be glad to share my strategy for not wasting it (I'm retired but was a financial planner a few careers ago). It's not complicated but I don't think it needs to be explained in this forum...but maybe. If you're interested just send me your email and I'll explain.
 

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Yes, Jeko44 is correct. I did the same thing with an '18 I purchased in '19. The tax form asks for the date it was "put into service" as I recall. BTW, if you don't have the total $7000 in taxes I'll be glad to share my strategy for not wasting it (I'm retired but was a financial planner a few careers ago). It's not complicated but I don't think it needs to be explained in this forum...but maybe. If you're interested just send me your email and I'll explain.
It's okay to at least mention so others can benefit. I am guessing that you might be talking about doing a Roth conversion from a regular 401K, which some people do in order to be able to take advantage of the $7,500 federal credit.
 

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It's okay to at least mention so others can benefit. I am guessing that you might be talking about doing a Roth conversion from a regular 401K, which some people do in order to be able to take advantage of the $7,500 federal credit.
Yes, that would be the idea. Although I would characterize it as going from an IRA (or maybe a 401k from a former employer rather than an active 401k since those likely can't be accessed) or other tax sheltered fund to a Roth so that the entire amount will grow tax free. For the tax year it will be added as "income" but only for the purpose of paying the taxes on the amount that's being transferred to the un-taxable position. It's a matter of estimating ones taxes in December and playing "high-low" to figure how much to transfer. Is at least a way to literally "capitalize" on the credit if your normal taxes don't cover it.
 

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As long as it is sold as new and you are the first registered owner then the model year doesn't matter.

You probably know this already but you have to have at least $7,500 in tax liability during the year of purchase in order to receive the full credit.
You have 5 years to take the federal tax credit (all at once or in partial credit in any given year 1-5)
 

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You have 5 years to take the federal tax credit (all at once or in partial credit in any given year 1-5)
You can only use the credit in the tax year that you purchased the car. If you don't have $7,500 in tax liability that year then you will not receive all of the credit. You cannot apply the unused part of the credit to future tax years.
 

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Be careful. I had one dealer advertise car as new. They had actually put it in service to claim the tax credit and were then selling it at near retail as a CPO. Honda dealers seem to make "buy here, pay here" used car dealers look like the pinnacle of integrity.
 
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