You have to pay taxes to get a clean car credit

Financial Planners


question: I am retired, living on Social Security, and would like to purchase a plug-in hybrid vehicle. I don’t pay taxes, how does the credit work? – RB, no city specified

answer: The clean car tax credit worth up to $7,500 is a non-refundable credit, so you must pay taxes to receive it. For this reason, you may consider generating tax invoices through IRA distributions, Roth conversions, or sales of investments in non-qualified brokerage accounts. For more information on these strategies, please consult your tax advisor. – Tommy Lucas

question: I’m leaving the company, but they gave me a nice severance pay. I also have a 401(k) and a pension. What can you do with them? – RJ, Orlando

answer: You can roll your 401(k) into your IRA. Annuities are most likely to be incorporated into an IRA as most companies offer a lump sum distribution option. Your pension plan administrator will check it for you. – Rhonda Schartleff

I have a question? Send an email to askanexpert@fpafla.com. Please include your name (only initials will be printed), hometown and phone number. Questions will be answered by a certified financial planner from the Central Florida Financial Planning Association. Answers are used for educational purposes only. You should also consult a financial expert. Questions and answers may be edited for space.



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