Electric car tax credit: what is Form 8834?
Do you qualify for the electric car tax credit? Learn how Form 8834 can help you reap the tax benefits if you’ve purchased or used an electric car in a previous tax year.
Key Takeaways
- To claim the electric car tax credit, you must use Form 8834 in conjunction with Form 8582-CR.
- The credit is equal to 10% of the cost of each qualified plug-in electric vehicle with a maximum credit of $2,500 per vehicle.
- You can use Form 8936 to claim an electric vehicle tax credit for vehicles purchased and placed into service during the current tax year.
- The vehicle must meet certain criteria in order to qualify for the credit.
There are several benefits to owning an electric car. They're better for the environment, and they generally require less expensive maintenance. There's also an electric car tax credit that you might be able to claim. Let's take a closer look at what the electric vehicle tax credit is, along with the form — Form 8834 — you'll need to claim this benefit.
What is Form 8834?
Form 8834 is used to claim electric vehicle passive activity tax credits from prior tax years. You’ll use Form 8834 in conjunction with Form 8582-CR to calculate your passive activity credits. Passive activity credits are carried-over credits from previous years in which you weren’t able to claim the credits due to passive activity rules.
If your vehicle qualifies, you'll receive a credit equal to 10% of the cost of each qualified plug-in electric vehicle with a maximum credit of $2,500 per vehicle. Keep in mind that you must be the original purchaser of the vehicle in order to qualify.
What is Form 8936?
You can use Form 8936 to claim an electric vehicle tax credit for vehicles purchased and placed into service during the current tax year. Form 8936 is used for qualifying plug-in electric drive motor vehicles, including qualified two-wheeled plug-in electric vehicles. On Form 8936, you can claim a tax credit as high as $7,500. The amount you can claim depends on how the vehicle you purchased is being used, if you're driving the vehicle for personal use or business use, and the amount of your tax liability.
TurboTax Tip:
If you think you qualify for an electric car tax credit, TurboTax can help you fill out the correct forms.
What other criteria must be met to receive a credit using Form 8834?
When claiming an electric car tax credit with Form 8834, you’ll need to make sure the vehicle meets certain requirements. All of the following criteria must be met in order to qualify for an electric car tax credit on any two- or four-wheeled electric vehicle:
- You purchased the vehicle new.
- The vehicle has a gross vehicle weight under 14,000 pounds.
- The vehicle was designed to be driven on public roads.
- The vehicle is charged from an external source (plug-in).
- The vehicle has a battery pack with at least a 4 kilowatt-hour capacity if four-wheeled and a 2.5 kilowatt-hour capacity if two-wheeled.
- 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.
It's important to note that if you are leasing the electric vehicle, then only the owner (usually a dealership) is entitled to the credit. Also, even if you purchase an electric vehicle from someone who did not apply for the credit, you still are not eligible for the credit.
Do I need any special certifications to qualify for an electric car tax credit?
When you purchase your electric vehicle, generally your dealer should certify whether the vehicle is eligible for the tax credit. In most cases, the dealer certification alone qualifies the vehicle for the credit, and you don't need any additional documents from the manufacturer to support your eligibility.
If you think you qualify for an electric car tax credit, TurboTax can ensure that you fill out the correct forms and that you're rewarded for your environmentally-friendly choice.
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