Form 8936, titled “Clean Vehicle Credits,” is used to claim tax credits for clean vehicles, including new clean vehicles, previously owned clean vehicles, and qualified commercial clean vehicles. The requirements vary by credit type, but general eligibility and reporting rules apply across all parts of the form.
General Requirements for All Clean Vehicle Credits
- Ownership and Use: You must acquire the vehicle for use or to lease to others, and not for resale. The vehicle must be placed in service during your tax year.
- Primary Use in the U.S.: The vehicle must be used primarily in the United States.
- Vehicle Identification and Reporting: You must include the vehicle identification number (VIN) on Form 8936. The seller must provide a time-of-sale report containing required information about the vehicle and the buyer.
- Income Limit: Income limits apply only to the new clean vehicle credit and the previously owned clean vehicle credit. Your modified adjusted gross income (MAGI) must not exceed:
- $300,000 if married filing jointly or qualifying surviving spouse
- $225,000 if head of household
- $150,000 if single or married filing separately
- You may use the lower of your MAGI for the year the vehicle is placed in service or the prior year.
- Vehicle Certification: The vehicle must be manufactured by a qualified manufacturer and meet IRS eligibility requirements. The seller must report the vehicle as eligible to the IRS and provide documentation to the buyer.
- Availability of Credit: Clean vehicle credits are generally available for vehicles placed in service after 2022 and before 2033, subject to statutory requirements.
Specific Requirements by Credit Type
New Clean Vehicle Credit (Part II and Part III)
- Original Use Requirement:
The original use of the vehicle must begin with you.
- Final Assembly Requirement:
The vehicle must undergo final assembly in North America.
- Battery and Critical Mineral Requirements:
The amount of the credit depends on whether the vehicle meets battery component and critical mineral sourcing requirements.
- Personal Use Portion (Part III):
If claiming the credit for personal use, complete the personal-use section to determine the allowable credit.
- Unused Credit:
The credit is nonrefundable. Any unused portion due to tax liability limits cannot be carried forward or back.
Previously Owned Clean Vehicle Credit (Part IV)
Vehicle Requirements:
- Purchase price must not exceed $25,000
- Vehicle must be at least 2 years old at the time of sale
- Must be purchased from a dealer
Buyer Requirements:
- You must be a qualified buyer
- You cannot claim this credit if you claimed it within the prior 3 years
- Income Limits Apply:
The same MAGI limits listed above apply.
Credit Transfer Election:
You may elect to transfer the credit to an eligible dealer in exchange for a reduction in the purchase price.
Unused Credit:
The credit is nonrefundable and cannot be carried forward or back.
Qualified Commercial Clean Vehicle Credit (Part V)
Business Use Requirement:
The vehicle must be used in a trade or business or held for the production of income.
Credit Calculation:
- 30% of the vehicle’s basis for vehicles not powered by gasoline or diesel
- 15% for certain hybrid or other qualifying vehicles
- Subject to per-vehicle dollar limitations
No Income Limits:
Income limitations do not apply to this credit.
Interaction With Other Provisions:
The vehicle’s basis must be reduced by the amount of the credit. Section 179 may be claimed separately if otherwise eligible.
Reporting from Pass-Through Entities:
Credits from partnerships and S corporations are reported on Schedule K-1 and may flow to Form 3800 (General Business Credit).
Source:
Form 8936 & Schedule A.pdf
Disclaimer: Always verify requirements with current Federal or State Department of Revenue Forms and Instructions. Tax laws and forms may change annually. For complex situations, consult a CPA or tax attorney.