Check my math:How to optimize ev credits and child credits using roth conversion

[cincystache]

We bought a new EV in early February 2022 and I'm trying to figure out how to maximize our tax credits for 2022.

MFJ with 2 kids under age 6 = 4,000 credit (3,000 refundable)
EV tax credit = 7,500 nonrefundable
Projected federal tax owed before Roth conversions = 6,883

Our plan is to convert traditional IRAs to Roths to increase our taxable income so we can get the full 7,500 back but we also want to make sure we are factoring in the child tax credits as well.

Scenario A: If we Roth-convert enough to increase our tax owed to 7,500, would we get refunded the $3,000 from the child tax credit?

Scenario B: If we Roth-convert enough to increase our tax owed to 11,500, we would still owe no tax for the year but we would also get no refund (just a larger amount converted to Roth) correct?

Is my math correct here or am I missing something? Any suggestions on which scenario is better or perhaps another strategy that we haven't considered?

Thanks for the help

[MDM]

I think if you put the EV credit amount in cell Calculations!G25 of the case study spreadsheet (CSS), it will handle that appropriately and thus address your questions.  The CSS definitely works best if you use Excel (e.g., to show the marginal rate chart), but may work well enough with other spreadsheet programs to do a snapshot tax calculation.

[WantaStache]

The EV credit is not refundable, but if there is any unused this year, it rolls to next year. Seems odd to try to force taxes just to use it all this year?

[EchoStache]

The EV credit is not refundable, but if there is any unused this year, it rolls to next year. Seems odd to try to force taxes just to use it all this year?

Depends...there are so many tax credits.  Also, I wasn't aware the EV tax credit rolled over.  My situation is similar in that I may have to do a Roth conversion to get my taxable income high enough to get the full credit.  But if it rolls over I may not bother with it.  I still like tIRA as I don't expect my income to be very high in retirement.  What if they want to buy a 2nd EV next year?  What if they want to go solar next year?  Or install a heat pump, etc.

[cincystache]

The EV credit is not refundable, but if there is any unused this year, it rolls to next year. Seems odd to try to force taxes just to use it all this year?

Do you have any sources to support this? This is also the first I've heard of the tax credit's ability to carry forward into future tax years. I haven't followed the new tax credit rules that start being applicable in 2023 since again, I purchased our car in Feb of 2022 under the "old" rules.