As the shift towards sustainable transportation accelerates, electric vehicle (EVs) are becoming increasingly popular among consumers. Not only do they contribute to environmental sustainability, but they also come with potential financial benefits through the Electric Vehicle (EVs) Tax Credit. At Alexis Robins, tax and accounting firm in Brooklyn, NYC, we want to ensure you’re well-informed about this credit and how to claim it correctly.
Here’s everything you need to know!
Key Forms to File
Form 8936: Electric Vehicle Credit
When claiming the Electric Vehicle (EVs) tax credit, Form 8936 is essential. This form must be filed with your tax return to validate your eligibility for the credit. Keep a copy of this form with your tax records, as your tax return could be rejected without it. Ensure that all details are accurate and complete.
Form 15400: Seller’s Certification
Buyers eligible for the EV credit must obtain Form 15400 from the dealer or seller of the vehicle. This form acts similarly to a W-2 and is necessary for the seller to report to the IRS. It’s crucial to obtain this form to ensure a smooth claiming process.
Understanding the Claim Limitations
Single Claim Per Vehicle
It’s important to note that only one person can claim the EV credit per vehicle. If multiple individuals are interested in claiming the credit for the same vehicle, only one will be eligible, so plan accordingly!
USA Use Requirement
To qualify for the credit, the EV must be purchased for use within the United States. Ensure that your purchase complies with this requirement to avoid any complications.
Business Use of the EV Credit
The EV tax credit is not limited to personal use; it can also be claimed for business purposes. This can significantly benefit businesses looking to transition to electric vehicles.
Non refundable Credit
Keep in mind that the personal EV credit is nonrefundable. This means that if you do not use the entire credit amount, you cannot carry forward the unused portion. However, if the credit is claimed for business purposes, any excess credit can be carried forward to future tax years.
Income Limits and Vehicle Price
To qualify for the Electric Vehicle tax credit, certain income limits apply. Your Modified Adjusted Gross Income (MAGI) must not exceed:
● $300,000for married filing jointly
● $225,000for heads of household
● $150,000for single filers
Additionally, there are price limits on the vehicles:
● Carsmustbeunder$55,000.
● SUVs,vans, and trucks must be under $80,000
Ensure you review these limits carefully before making a purchase to maximize your credit eligibility
Other Energy-Saving Credits
Be mindful of other energy-saving credits that may be available. These credits are often based on the taxes owed on your return. It’s advisable to consult your tax preparer for personalized guidance to ensure you’re leveraging all available tax benefits.
New Point-of-Sale Transfer in 2024
Starting in 2024, buyers will have the option to transfer the EV credit to the dealer at the point of sale, effectively allowing them to receive a discount instead of waiting to claim it on their tax return. However, it’s important to be cautious; if you claim the credit and later find out you do not qualify, you may be required to repay it when filing your tax return.
Battery Source Requirements
Finally, not all EV purchases qualify for the full tax credit due to Battery Source Requirements. Vehicles must meet both critical mineral and battery component requirements to qualify for the full $7,500 credit. If the vehicle meets only one of these requirements, a $3,750 credit is available. Make sure to verify that your selected EV meets these criteria before purchasing.
Conclusion
Claiming the Electric Vehicle tax credit can significantly enhance the financial benefits of owning an electric vehicle. However, it is crucial to understand the associated requirements, forms, and limitations to ensure a smooth claiming process. At Alexis Robins, we’re here to guide you through the complexities of tax filings and help you maximize your benefits through our skilled team of accountants. Stay informed and take advantage of the EV tax credit—your wallet and the planet will thank you!
