Beatrice Lang
If you've purchased a plug-in electric vehicle, you may be eligible for a tax credit of up to $7,500. To claim this credit, you'll need to fill out Form 8936, the Qualified Plug-In Electric Drive Motor Vehicle Credit, and attach it to your Form 1040 when filing your tax return. This credit is available for certain new electric vehicles placed in service before 2023. If you purchased your vehicle after December 31, 2022, you may be eligible for the new Clean Vehicle Credit instead. To enter this information in Lacerte, go to Screen 28, General Business Credits (3800), and select the Qualified Plug-In Electric Drive Motor Vehicle Credit (8936) from the left Sections list.
| Characteristics | Values |
|---|---|
| Form Number | 8936 |
| Form Name | Qualified Plug-In Electric Drive Motor Vehicle Credit |
| Credit Amount | Up to $7,500 |
| Form Type | IRS form |
| Vehicle Type | Plug-in electric vehicles (EVs) |
| Vehicle Status | New |
| Vehicle Placement | Before 2023 |
| Module | Corporate |
| Screen Number | 28 |
| Section | General Business Credits (3800) |
| Date | After December 31, 2009, through December 31, 2022, or January 1, 2023, through December 31, 2032 |
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What You'll Learn
Form 8936 for the Qualified Plug-In Electric Drive Motor Vehicle Credit
Form 8936 is an IRS form that allows taxpayers to claim a tax credit for a qualifying electric vehicle. This form can be used for vehicles purchased after December 31, 2009, through December 31, 2022, or from January 1, 2023, through December 31, 2032. The Qualified Plug-In Electric Drive Motor Vehicle Credit has been replaced with the Clean Vehicle Credit for vehicles purchased after December 31, 2022. The Clean Vehicle Credit is made up of two $3,750 requirements: battery components and critical minerals.
The amount of the tax credit depends on eligibility requirements and whether the vehicle was purchased in or after 2022, or in or after 2023. The credit for these types of vehicles can reach up to \$7,500, depending on the capacity of the electric battery. For example, an EV purchased in or before 2022 with a five-kilowatt-hour battery is eligible for a $2,917 credit. The credit increases by $417 per additional kilowatt-hour over 5 kWh up to a maximum of $7,500. For vehicles purchased between January 1 and April 17, 2023, the base amount for the credit is $2,500, with an additional $417 for a vehicle with 7 kWh hours of battery capacity and $417 for every kWh beyond 5 kWh for a maximum credit of $7,500. For vehicles purchased after April 18, 2023, taxpayers can receive $3,750 or a maximum credit of $7,500, depending on factors such as minerals and battery components.
To file Form 8936, you will need to complete the form with the VIN for your electric vehicle. Form 8936 is also used to determine your tax credit value for certain qualified two or three-wheeled plug-in EVs. In addition to the buyer filing Form 8936, the seller or dealer is required to report certain information about the vehicle to both the buyer and the IRS. This includes the vehicle's make, model, VIN, and battery capacity.
When you file your taxes for the year, you will fill out Form 8936 to receive your tax credit and direct dollar-for-dollar reduction of your taxes owed. Because it is a nonrefundable tax credit, you will only receive a credit to the point that your tax liability is reduced to zero, and you will not receive any balance beyond that point.
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Form 8936 vs Form 8834 for the Qualified Electric Vehicle Credit
To claim a tax credit for a qualified electric vehicle, you must use Form 8834 in conjunction with Form 8582-CR. This credit is equal to 10% of the cost of each qualified plug-in electric vehicle, with a maximum credit of $2,500 per vehicle. Form 8834 is used to calculate passive activity credits, which are carried over from previous years in which you were unable to claim credits due to passive activity rules. To qualify for this credit, you must be the original purchaser of the vehicle, and the vehicle must meet certain requirements, including:
- The vehicle was purchased new
- The vehicle has a gross weight under 14,000 pounds
- The vehicle is designed to be driven on public roads
- The vehicle is charged from an external source (plug-in)
- The vehicle has a certain battery pack capacity
- The vehicle is largely set in motion by an electric motor that draws electricity from a battery
- You did not buy the vehicle with the intent to resell it
- You drive the vehicle primarily in the United States
Note that if you are leasing the electric vehicle, only the owner (usually a dealership) is entitled to the credit.
On the other hand, Form 8936 is used to claim an electric vehicle tax credit for vehicles purchased and placed into service during the current tax year. This form is used for qualifying plug-in electric drive motor vehicles, including qualified two-wheeled plug-in electric vehicles. The amount you can claim depends on how the vehicle is being used (personal or business) and can be as high as $7,500.
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Corporate module of Lacerte
The Corporate module of Lacerte is used for preparing corporate tax returns, specifically Form 1120. This form is required for corporations to report their income, deductions, gains, and losses to the IRS.
When preparing a Corporate (Form 1120) return, certain additional forms may need to be generated, depending on the specific circumstances of the corporation. For example, if California is involved, you may need to generate CA Form 199. To do this, navigate to Screen 54.1, Homeowner's Associations, and check the box for "Homeowners association (Mandatory)". Then, fill out the required information in the California Homeowner's Assoc. (199) section. Make sure to check the box for "Exempt" under section 23701t and enter gross receipts, as Form 199 is for Exempt Organizations.
Another form that may need to be generated is Form 8858, which is used for Foreign Disregarded Entities. To do this, go to Screen 78 and check the box labelled "Print Form 8858 with return". Select the appropriate option for Owner/Operator/Interest Holder, which is mandatory. Then, complete any other applicable items on this screen. Next, go to Screen 4.1, Miscellaneous Information, and ensure there are no entries in the "Number of Forms 8858 attached [O]" field. If there is an entry, remove it, as having an entry in this field indicates that the forms have been completed elsewhere and will be attached manually to the tax return.
The Corporate module of Lacerte provides a streamlined process for corporations to prepare their tax returns and stay compliant with IRS regulations. It is important to refer to the specific instructions and guidelines provided by the IRS and tax professionals to ensure accurate and complete reporting of corporate tax information.
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Vehicle information, date of service, kilowatt-hour capacity, etc
Vehicle information is a crucial aspect of the electric vehicle (EV) credit process. When applying for an EV credit, you must provide detailed information about your vehicle to ensure eligibility and accurate calculation of the credit amount. Here is an overview of the key vehicle-related details you need to know:
Vehicle Information
The type of vehicle you own or plan to purchase plays a significant role in determining your eligibility for EV credits. The vehicle must meet specific criteria to qualify for the credit. Firstly, it should be a clean vehicle, which can be further categorised into two types:
- New Clean Vehicle: This refers to a recently acquired vehicle that has not been previously owned. For a new clean vehicle, the dealer or seller must provide a report to both you and the IRS, containing essential information for claiming the credit.
- Previously Owned Clean Vehicle: This is a vehicle that has been owned before. Certain requirements must be met for a vehicle to be considered a qualified previously owned clean vehicle, as outlined by the IRS.
Date of Service
The date you placed the vehicle into service, or the date of purchase, is an important detail. To be eligible for the EV credit, you must have placed the vehicle in service during the tax year for which you are claiming the credit. This date helps determine the applicable tax credit amount and any relevant regulations.
Kilowatt-Hour Capacity
The kilowatt-hour (kWh) capacity of your vehicle's battery is a critical factor in EV credits. Kilowatt-hours are the units of electricity that your EV's battery stores and consumes as you drive. The IRS sets minimum kWh requirements for vehicles to qualify for the credit. For instance, a vehicle with a gross vehicle weight rating (GVWR) of less than 14,000 pounds must have a battery capacity of at least 7 kWh. Modern EV batteries typically range from 50 kWh to 150 kWh, with some offering even higher capacities.
Additional Vehicle Specifications
Other vehicle specifications that may be relevant for EV credits include the vehicle's sales price, its primary use, and whether it is leased or owned. The IRS also requires verification that the original use of the vehicle begins with you, the claimant. It is important to note that if the vehicle is leased, only the lessor, not the lessee, is entitled to claim the credit.
When compiling vehicle information for your EV credit application, it is essential to refer to the specific guidelines provided by the IRS and your local tax authorities. They outline the eligibility criteria, required documentation, and any recent updates to the credit programme.
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The Clean Vehicle Credit
It is important to note that the Qualified Plug-In Electric Drive Motor Vehicle Credit has been replaced by the Clean Vehicle Credit for vehicles purchased after 2022 due to the Inflation Reduction Act of 2022. Additionally, certain final assembly requirements were added for vehicles purchased after August 16, 2022. This means that if you bought a qualified electric vehicle between August 17, 2022, and December 31, 2022, the vehicle must have undergone final assembly in North America.
When filling out Form 8936, you will need to enter information such as the vehicle information, date placed in service, kilowatt-hour capacity, phase-out, and business use. If applicable, you can also enter an override for the credit amount in the Qualified Plug-in Electric Drive Motor Vehicle Credit field.
To enter the Qualified Plug-in Electric Drive Motor Vehicle Credit in Lacerte, go to Screen 28, General Business Credits (3800). Select Qualified Plug-In Electric Drive Motor Vehicle Credit (8936) from the left Sections list. Enter the applicable information in the fields provided.
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Frequently asked questions
Go to Screen 28, General Business Credits (3800). Select Qualified Plug-In Electric Drive Motor Vehicle Credit (8936) from the left Sections list. Enter the applicable information in the Vehicle information, date placed in service, Kilowatt-hour capacity, phase-out, and business use fields.
The credit is worth up to $7,500 under Internal Revenue Code Section 30D.
Form 8936 is the official IRS form used to claim the Qualified Plug-In Electric Drive Motor Vehicle Credit.
The Qualified Plug-In Electric Drive Motor Vehicle Credit was available for vehicles placed in service before 2023. For vehicles purchased after December 31, 2022, you can claim the Clean Vehicle Credit instead.
