Key Takeaways
- The Alternative Motor Vehicle credit lowered the cost of qualifying alternative motor vehicles purchased before 2022.
- The credit has expired and was replaced with the Qualified Plug-In Electric Drive Motor Vehicle credit claimed on Form 8936 during the 2022 tax year.
- The credit has expired and was replaced with the Qualified Plug-In Electric Drive Motor Vehicle credit claimed on Form 8936 during the 2022 tax year.
- Currently, the only vehicle technology that qualifies for claiming this now expired credit is fuel cell technology.
- The Inflation Reduction Act of 2022 changed the tax credit available for clean vehicles by extending the life of the Qualified Plug-In Electric Drive Motor Vehicle credit through 2032, expanding it to cover more vehicles and renaming it the new Clean Vehicle Credit starting in tax year 2023.
What is the Alternative Motor Vehicle Credit?
The Alternative Motor Vehicle credit is meant to lower the cost of purchasing a qualifying alternative motor vehicle. Currently, the only vehicle propulsion technology that meets the requirements of this credit is fuel cell technology. The credit attributable to depreciable property (vehicles used for business or investment purposes) is treated as a general business credit. Any credit that is not attributable to depreciable property is instead treated as a personal credit.
The Alternative Motor Vehicle credit expired for vehicles purchased after 2021. One exception applies if you purchased the qualifying vehicle in 2021 but placed it in service during 2022. If this happened, you may still be able to claim the credit for 2022.
The most current information can be found on the Instructions for Form 8910. It's set out in easy-to-read tables based on make, model, credit amount, and purchase date. The credit was extended from its original timeframe to include certain vehicles purchased in 2015 through 2021.
What is an alternative fuel vehicle?
To qualify as an alternative fuel vehicle for the purposes of claiming the Alternative Motor Vehicle credit, your vehicle has to have at least four wheels and be a fuel cell vehicle. A fuel cell converts chemical energy directly into electricity by combining oxygen with hydrogen fuel. The electricity produced is used to propel the vehicle.
What are the vehicle certification requirements for claiming the Alternative Motor Vehicle credit?
In addition to meeting the fuel cell technology requirements, the vehicle also has to meet make, model, and model year certification requirements for you to receive the tax credit. Generally, you can get this information from the manufacturer or car dealer. They will also tell you the credit amount that the vehicle is eligible for.
Be aware that the Internal Revenue Service can withdraw certification for a particular make and model. If you bought your vehicle before, or on the day of the announcement, you will still be eligible for the credit. But if you made the purchase after the IRS announcement, you aren't eligible for the credit.
What other eligibility requirements are there for claiming the Alternative Motor Vehicle credit?
To qualify for the credit, you must be the vehicle's original owner or lessor and must use it primarily in the United States. You can't get the credit if you bought the vehicle to resell it.
Form 8910 vs. Form 8936
The Alternative Motor Vehicle credit is claimed on Form 8910 and isn't permanent. The credit wasn’t extended by Congress at the end of 2021 and instead was replaced by the newer Qualified Plug-In Electric Drive Motor Vehicle credit claimed on Form 8936. If a vehicle qualifies for the new credit that you can claim on Form 8936, you can’t claim that credit using Form 8910 for the Alternative Motor Vehicle credit.
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