Claiming the Clean Vehicle Credit Using Form 8936
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- เผยแพร่เมื่อ 1 มิ.ย. 2024
- If you've purchased a new or used electric vehicle in 2023, you could be eligible to claim the Clean Vehicle Credit. This credit was described in an earlier video, but since that video was published, the IRS has produced a draft version of the revised Form 8936 needed to claim the credit.
This video reviews the basics of the Credit, and demonstrates how to claim the credit on Form 8936 using examples.
0:00 Introduction
0:50 A review of the Clean Vehicle Credit
3:00 Form 8936
3:30 Examples of how to claim the Credit
6:41 Conclusion
NOTE: As of the publication of this video, the IRS had still not released the final version of Form 8936 and Form 8936, Schedule A. As such, draft versions of the forms are shown. The final forms are expected to be similar.
The earlier video giving more details on the Credit can be found here: • The Clean Vehicle Cred...
Additional Information and Resources:
IRS Form 8936: "Clean Vehicle Credits": www.irs.gov/pub/irs-pdf/f8936...
IRS Form 8936, Schedule A: "Clean Vehicle Credit Amount": www.irs.gov/pub/irs-pdf/f8936...
Instructions for Forms 8936 and 8936, Schedule A: www.irs.gov/pub/irs-pdf/i8936...
To see if your clean vehicle qualifies for the Credit, click here: fueleconomy.gov/feg/tax2023.s...
Nerdwallet.com: "EV Tax Credit 2023-2024: Rules and Qualifications for Electric Vehicle Purchases": www.nerdwallet.com/article/ta...
The Tax Geek on the Site Formerly Known as Twitter: @taxgeekusa
The Tax Geek on Reddit: www.reddit.com/r/askataxgeek
Image/Video Sources:
Storyblocks.com
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Wikimedia Commons
The images of "Raymond", "Anne" and "Alicia" were generated by thispersondoesnotexist.com (stability.ai). Any resemblance between these images and any persons, living or dead, is incidental and not intended. No other artificial intelligence was used to research, write, animate, voice, or edit this video
Intro Music: "Bluesy Vibes" - Doug Maxwell - TH-cam Creator Music
Outro Music: "Modern Attempt" - Track Tribe under license from TH-cam Creator Music
DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or financial advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or financial professional.
Just finished my taxes and the examples you provided were extremely helpful!
Thank you for wonderful video
Thank you for the video, While submitting the 8936 and 8936 schedule A form, do we need to attached them with fed tax form, state tax form or both?
They're attached to the Federal Form only, since they don't affect the state tax liability. If your state has a credit or incentive, they will have their own forms to claim it.
Thank You
You're welcome
Thanks for the video! Do you know if the IRS has released the updated draft version? I'm waiting to finish filing my taxes until this form is updated.
Yes, the final version of the form has been released.
@@TheTaxGeek Great - thank you for the info!
Great video! In the first example, are you not allowed to choose higher AGI to maximize tax credit of $7500?
If you could choose tax credit towards 2023’s record (AGI $92,000), you could have get more return more than the amount of 2022 ($7,279 for AGI $87,000).
Using prior year's AGI is only used to qualify for the credit (lower is better). The credit itself is taken against the current year's tax liability.
I needed to amend return for 2022 for a hibrid vehicle.
I could not find instructions for certain lines of Schedule A, the instructions for form 8936 do not provide info for schedule A, do you know where I can find these instructions?
Which lines did you have questions for, because I thought I covered filling out the Schedule A for most situations in the video.
Thanks for the great video on Form 8936. I generally do my taxes using online softwares like TaxAct or Turbo Tax. I do see the clean vehicle credit form on there but not as tedious as filling paper version. If I do it online via the Tax Software do I still need to send any copies of EV Purchase (Pink slip) or anything to IRS? Seems like everyone on TH-cam is explaining the paper version and not talking about the online tax filing.
The reason that I (and other tax channels) focus on the paper form is that we're trying to demonstrate the process of calculating the credit. No one expects these forms to be filled out without a computer. In no case do you have to send a copy of the bill of sale to the IRS--that information is reported to the IRS by the dealer you bought the vehicle from. However, you should retain it in case the return is audited. Actually, you should retain the bill of sale until you dispose of the vehicle, for reasons that aren't related to taxes.
Thank you!
@@TheTaxGeek so does this mean I can file my rest of taxes through software like turbotax, but ev credit via paper form and submit to irs separately?
Do we need to add this info in any section of 1040 form as well? My friends got their federal return but still waiting for his EV tax credit.
If you fill out Form 8936, the Credit you calculate is then transferred to Schedule 3, and ultimately should end up on line 20 of Form 1040, as illustrated in the video. Any Credit is part of the outcome of the return. It isn't sent separately.
I'm confused; line 1a of 8936 asks for line 11 of "2023 Form 1040" (Adjusted gross income). Is this the info of the filing I made in '23 for the FY '22? Or is it really asking for FY '23 (yet to be filled out in 2024). For context, I signed a binding agreement prior to August, 15th 2022 (thus, subject to the EV credit rules at the time); and purchased an EV on Dec. '23.
Your 2023 Form 1040 Adjusted Gross Income is your AGI for 2023. You actually have to complete your taxes for 2023 to this point to fill out Form 8936
@@TheTaxGeek but I'm supposed to be amending my 2022 tax return. If I'm doing that, why would I include data from a later year?
For context, based on IRS guidance: "f you entered a written binding contract to buy a vehicle after December 31, 2021, and before August 16, 2022, but took delivery on or after August 16, 2022, you may elect to claim the credit based on the prior rules. To elect the credit under the prior rules you must elect the credit on your 2022 tax return after you take delivery of the vehicle. Depending on the date the vehicle is delivered, you can claim the credit on your original, superseding, or amended 2022 tax return. "
What if your 2022 AGI was negative? My return was rejected for having a negative in line 3a. But I’m under the AGI threshold in 2023. Do I still qualify? Can I put $0 (zero) in line 3a to fix this?
Yes. It should work.
According to the form, if the vehicle is used and $4000 credit was received the business/personal use doesn't apply? Can you get a used vehicle and occasionally use it for rideshare driving? Mixed use, maybe 50/50 business/personal miles and deduct mileage (not actual cost)?
If you're just doing occasional ride shares, you would just take the Standard Mileage Rate and the Credit is unaffected, because you're not depreciating the vehicle. If there's sufficient business use to justify claiming actual expenses, the Credit is subtracted from any depreciable basis.
If I bought my Tesla Model Y in Feb. 2022, can I file it on my 2023 tax form? Or am I eligible?
If you bought your Tesla in 2022, you would claim the credit on your 2022 return. You might not be eligible since under the old rules, Tesla had met its production cap, after which all production afterward is not eligible for the credit. Unfortunately, that provision of the new law was not made retroactive.
Hello i have a curious question: me and my wife got a qualified used ev car. So we will have 4000 credit. In case our jobs collected a lot more than we ownned because now with the credit will reduce this amount we owned that mean we can get the excess back to us? Not the credit but what our jobs collected extra
The Credit reduces your net tax liability (line 24 of your 1040). If you had more taxes withheld than your net tax liability, that overage is refunded to you.
@@TheTaxGeek in case the dealer is not doing the time of sale report that started Jan 2024 can I still buy the car and claim on my tax return next year? I am confused if IRS want now to only be claimed by the dealer at the time of the sale.
I have a tax liability greater than the 7500 in line 16.. we ended up getting a good refund when all was done but we didn’t include the credit.. if we redo and add the credit will it potentially increase our refund ?
Yes, if you amend your return to claim the Credit, it will be refunded to you.
@@TheTaxGeek what line on my 1040 would I currently see any personal credits? Just want to make sure I’m good.. don’t think I have any but want prepared by me…
If im buying a tesla model Y and under my name and business, and it is 100% used for business, when i file tax, do i can get the $7500 ev tax credit or how does it work?
You can get the Clean Vehicle Credit for a vehicle used for business, although I didn't go over the procedure in the video (perhaps a future video!). But the important thing to remember if you take the credit and later depreciate the vehicle, the Credit reduces the depreciable basis of the vehicle.
I leased in 2023. I heard there is a loophole that allows a wider range of vehicles to be considered. Is that true?
I have not heard of any such "loophole." What I have heard is that some automakers selling electric vehicles that do not meet the assembly and sourcing requirements are giving $7,500 "discounts" to make their products more competitive with qualifying models. But that is through the automaker, not the government.
If i leased a 2023 Tesla Model Y can i claim the credit?
Unfortunately, the Credit is only available if you purchase the vehicle, not if you lease it.
If my adjusted gross income is higher in 2023 than it was in 2022 (80k vs 60k) and I bought a new ev, do I HAVE to use the less of the 2 or can I opt to go for the 80k since I would have owed more in federal taxes?
I want to maximize my chances of getting the full 7,500 for my 2023 bolt EUV
Also, since this would put 2022s taxes at essentially 0 owed for federal, how would this affect 2023s tax returns? Would I still get a refund as normal or no?
Choosing to use your 2022 or 2023 adjusted gross income to qualify for the Clean Vehicle Credit has nothing to do with your reportable 2023 income or taxes. If your 2023 AGI is $80k, you would still pay taxes on that income (less standard or itemized deductions) even if you choose to use your 2022 AGI to qualify for the credit. The second example in the video shows how this works.
If I leased a ev and then bought it out in 2023, does that make it eligible for the used 4,000 credit?
On page 2 of the instructions for Form 8936, it states that to claim the used Clean Vehicle Credit, the original use of the vehicle must begin with someone other than the taxpayer, so unfortunately, no.
Bummer! That’s for clarifying.
Should dealer also complete info through irs portal as clean vehicle qualified seller? Whot if dealer will sell you car and do not complete it?
If dealers who want to sell vehicles eligible for the Clean Vehicle Credit, they must register with the IRS and report the sales. Starting this year, dealers who are properly registered can start offering the Credit directly to buyers as a purchase price reduction, and receive the Credit themselves. Who wouldn't want to do that?
@@TheTaxGeek i do not know. I was shipping before the end of the year and we have carvana with +2k for used cars and independent dealers with normal prices, but they do not know about registration and trying to sell you car without submission info to irs. "You will be fine, i sold a lot of Teslas " )))
That is why I am asking, what is going to happen, if the dealer will not submit info and you will file return.
So, if one has a child tax credit, the credit for clean vehicle is reduced because of that credit already filed?
No, it shouldn't. Because the Child Tax Credit is potentially refundable, the clean vehicle credit (or any other non-refundable credit), is taken first, even though child tax credit comes before nonrefundable credits on Form 1040.
If I’m self employed and bought a vehicle for 10% business use and can still claim the full amount, does that 10% go under Part II and then what happens to that amount?
If you split the Credit between business and personal use, the credit allocated to business use reduces the depreciable basis of the vehicle.
@@TheTaxGeek Is this different for new vs used vehicles? According to the forms new vehicle credit can't be used for business but used vehicle credit questions to determine if you qualify seems to allow that. My question is can a used vehicle be used for occasional Uber driving and claim mileage deduction (not actual cost expenses)?
What about Form 15400 from the Dealer? Tesla did NOT auto-generate Form 15400 for new sales prior to April 18. 2023. You have to request a Form 15400 be generated if you purchased during this period in early 2023. This dealer Form 15400 is what the IRS relies on to validate the sale and determine if refund is due vs someone just "making up" a Form 8936. Checks and balances.
I knew that all sales of qualifying vehicles were reported to the IRS, but I did not know the exact reporting mechanism. Thanks for weighing in!
What if I do not have any income in 2023 since I'm a nonresidence alien student (i.e. no Form 1040NR for 2023 Tax Return)?
The Clean Vehicle Credit is a non-refundable credit. You cannot claim it if you have no tax liability.
I filed this form and my tax return keeps getting rejected and kicked back for editing. We are co-owners on the car, should who's TIN # matter on 8936? As in, Im listed at the primary buyer and my husband the co-owner, but we are filing under his TIN for married filing jointly, so its his TIN on 8936. Just wondering if this might be the problem bc VIN is correct...
Is is getting rejected by your software, or the IRS? On an MFJ return, the TIN on form 8936 shouldn't matter. But the form has several little i's that have to be dotted and t's that have to be crossed. Check to make sure every question on the form is answered correctly.
Thank you. Yeah, its getting IRS rejected and it's auto filled via FreeTaxUSA. Just trying to figure out the problem bc I dont want to do mail in!!@@TheTaxGeek 😦
Be sure dealer has filed Form 15400 on his end so IRS can validate the sale and appropriate rebate.
Good point!
Dealer claims 15400 not required. Only reporting the purchase (Feb ‘23 purchase). Looks like a lot of ppl will be filing by mail…
In 2022, I filed as head of household and was under the AGI limit of $225,000. In 2023, I'm filing as single and I'm over the AGI limit of $150,000. I purchased a qualifying EV in 2023. According to this form, I do not qualify, as I cannot specify that I filed as HOH in 2022. Does anyone have any idea what I can do to get the credit?
Unfortunately, probably not. Though you can choose either current or prior year AGI to qualify for the Credit, the qualification is based on this year's filing status. If you filed as HOH again it wouldn't be a problem, but that's only if you qualify as HOH.
Do I qualify if I bought my car Dec 2022?
You might qualify under the pre-2023 rules. Details of those rules can be found here: th-cam.com/video/5UR96NhTpAY/w-d-xo.html You would have to amend your 2022 return if you qualify to claim it.
Nope.
how to find the identifying number at the top?
It’s the VIN number on your bill of sale.
If I’m married but filing separately I should go ahead and follow the steps as if I was single?
Yes. The phrase "all other filing statuses" includes Single, Qualified Surviving Spouse, and Married filing Separately.
Hello Please help me answer I live in Maryland Income 90K Tax Liability 11K 2023 Model Y Performance Delivery 02/04/2023. Fully Qualifies 7,500 H&R Block states I don not qualify Any Ideas should I go to an accountant H&R Block is lost in the sauce
I really can't see why you wouldn't qualify for the Credit. The only possible reason is that you're leasing the car rather than having bought it. I would get a second opinion from another Tax Professional.
Can you fill this form with TurboTax?
I don't know for sure because I'm not familiar with TurboTax, but I assume you can.
It might be a silly question. However, after 8936 and 8936A are filled where should I send them to the IRS? I filed my tax return through TurboTax and they didn’t offer the option to attach that form
Turbo tax will let you file this form using their system! I just did mine today and my $4k rebate was included. They made it easy and I did it under the federal return. I don’t believe you have to mail in the physical form altho the form 8936A will not be available until Feb 14th!
When you talk about tax liability are you referring to line 18 on 1040. Or line 24 total tax liability thank you.
When I talk about "tax liability," I am talking about the figure on line 16, at the top of page 2 of your 1040.
@@TheTaxGeekthank you for replying. I missed calculated I don’t make enough money for the full $7500. I was expecting the $7500 go for total tax liability on line 24. 😢
I just submitted my 2023 tax return and the vin for bmw x5 503 keeeps getting kicked back. Is thia happening to anyone else?
The BMW Xdrive 50E qualifies for a $3,750 Clean Vehicle Credit. Is that the vehicle you purchased? Remember, the MSRP of the vehicle must be under $80,000. That's not the price you paid, that's the price on the sticker.
Do you have to owe $7500 in taxes to qualify??
To get the full benefit of the Credit, you need a tax liability of at least $7,500. If your tax liability is less than that, the Credit will reduce your net tax to zero.
@@TheTaxGeek Looked it up, and it said you didn’t after I watched this video
@@TheTaxGeek Does the tax liability means 7500 of federal tax, or includes state, medicaid and social security as well? Thanks in advance.
Is this credit refundable ?
No
The dealer wants me to claim the credit , IRS will pay me the 4k for this year's tax return?
As of 2024, you can now claim the Credit in advance and get an immediate reduction in selling price. So instead of getting a lump sum at tax time, you get a reduction in selling price which you can use to lower your payment. From what I've read, the Credit will have to be reconciled on your 2024 return, but if the Credit you received when you purchased the vehicle exceeds your tax liability, you get to keep the entire credit. All in all, it's better to claim the Credit when purchasing the vehicle.
Wait if u don’t owe money then u get nothing?
If you have no tax liability, which is the number on line 16 of your 1040, or if that number is less than the total credit, that's all the credit you will receive. The Credit is neither refundable nor carry-forward.
@@TheTaxGeek I'm a bit confused by this. So if my taxable income is $0 then I don't get the credit?