Tax Credit - question / help

[michalm]

Hello,

2 weeks ago I bought FFE for my personal use (not business). I really like this car and I’m very excited to have it. I Live in Massachusetts and already got approved for MOR-EV Rebate Project.

I'm trying to get $7500 tax credit, and I need your help.

What I learned so far - I need to fill out the credit from Form 8936. Do I need to do it now or on next tax year, when I file my taxes? How to fill out the Form ? Can somebody can explain me step by step what and how to do it ?

Thank you so much for help.

 

[WattsUp]

What I learned so far - I need to fill out the credit from Form 8936. Do I need to do it now or on next tax year, when I file my taxes? How to fill out the Form ? Can somebody can explain me step by step what and how to do it ?

You will claim the credit on your federal taxes for the year in which you purchased your car. So, if you purchased your car in 2014 (which apparently you did), then you will be able to apply the credit when you file your 2014 federal tax return. So, you won't need to worry about this until next April 15.

Keep in mind that the credit can only be applied towards your tax liability -- it is not a rebate. So, to get the full benefit, you must owe at least $7,500 in total federal taxes for 2014.

 

[hybridbear]

Hello,

2 weeks ago I bought FFE for my personal use (not business). I really like this car and I’m very excited to have it. I Live in Massachusetts and already got approved for MOR-EV Rebate Project.

I'm trying to get $7500 tax credit, and I need your help.

What I learned so far - I need to fill out the credit from Form 8936. Do I need to do it now or on next tax year, when I file my taxes? How to fill out the Form ? Can somebody can explain me step by step what and how to do it ?

Thank you so much for help.

Turbo Tax and other tax software will complete the form for you. Or, if you hire a tax professional to do your taxes they should have no issues completing the form.

 

[EVA]

Well you have to tell TurboTax you bought an electric vehicle. TurboTax is good, but it can't divine what you purchased!!! Actually it won't fill in the information for you either, you have to enter that also. It does give you the correct form to fill in.

Sorry Hybridbear - I was smiling at your comment that TurboTax would fill it in for you.

 

[hybridbear]

Well you have to tell TurboTax you bought an electric vehicle. TurboTax is good, but it can't divine what you purchased!!! Actually it won't fill in the information for you either, you have to enter that also. It does give you the correct form to fill in.

Sorry Hybridbear - I was smiling at your comment that TurboTax would fill it in for you.

Haha that's true

 

[michalm]

What about the limit of 200k vehicles for the tax credit? How is it determined who gets it if the limit is reached? Should I file any forms now to report that I bought my car to ensure the credit? Thank you

 

[Kakkerlak]

After a manufacturer reaches the limit of 200,000 eligible vehicles produced, the incentive tapers out over the course of the subsequent year. Comparing the date on your sales receipt from the dealership to the IRS phase-out schedule should determine your eligibility for the credit, when that time comes. There might be an extinction burst at the end !

Ford isn't within shouting range of 200,000 PHEV or BEVs, and won't be until 2018 or later.

A detailed but very readable summary of how the reduced credit schedule will work after 200,000 units and a nice summary of the history of the 2005, 2008, and 2009 changes to the Alternative Fuel Tax Credit is here:

http://energytaxincentives.org/consumers/vehicles.php

 

[Kakkerlak]

To answer your question directly: the IRS form includes lines for your VIN and the date the car was "placed in service". For a retail buyer, that's the day you bought it.

You don't have to file anything extra until you file IRS Form 8936 with your 2014 tax return. Some folks adjust their withholding so that they don't have to wait for next year's return to put some money back in their pockets, but I'd consult with a tax accountant before doing that.

[EDIT: corrected the IRS form number. 8910 was the old one, 8936 applies in 2014).

 

[Abelgoddard]

My wife's car is on it's last legs I think, and I'm starting to look around. She wants a small SUV for cargo purposes. My thought is, which PHEV might work for her? So I'm looking at the Volt, and notice that it looks pretty roomy back there (hatchback, folding seats). I think it's a possibility. The prices are similar enough to start (the Volt gets higher with options), but my lease really made sense since I was saving all that gas money. Though there would still be gas for the Volt, I think I can justify the extra cost by reason of being able to take trips in it, while being able to mostly just use the battery for local driving.

Here's the tl;dr as it applies to this discussion: Does anyone know of the incentives that apply to the Volt? Are they the same as for the FFE - $7500? I've just barely started a tiny bit of the search tonight, so I haven't found other sources of info about it just yet and thought somebody here might have some info about the Volt.

 

[Kakkerlak]

The Chevrolet Volt has a large enough battery that it qualifies for the full $7500 IRS Tax Credit for a plug-in alternative fuel vehicle.

What I don't know is if you can receive more than one of those credits per year. I suppose it's possible; I've seen family photographs of Mr., Mrs., and Jr. Volts.

Remember that the tax credit is a use-it-or-lose-it one-time credit and you have to owe more than $7500 in Federal taxes to get the credit.

I'm still on the fence between FFE and Volt.

 

[hybridbear]

The Chevrolet Volt has a large enough battery that it qualifies for the full $7500 IRS Tax Credit for a plug-in alternative fuel vehicle.

What I don't know is if you can receive more than one of those credits per year. I suppose it's possible; I've seen family photographs of Mr., Mrs., and Jr. Volts.

Remember that the tax credit is a use-it-or-lose-it one-time credit and you have to owe more than $7500 in Federal taxes to get the credit.

I'm still on the fence between FFE and Volt.

You can receive multiple credits in one year if you have enough of a tax liability. But if the FFE is leased then that credit was claimed by the leasing company and to purchase a Volt & get the full tax credit you would only need to have $7500 in tax liability.

My wife's car is on it's last legs I think, and I'm starting to look around. She wants a small SUV for cargo purposes. My thought is, which PHEV might work for her? So I'm looking at the Volt, and notice that it looks pretty roomy back there (hatchback, folding seats). I think it's a possibility. The prices are similar enough to start (the Volt gets higher with options), but my lease really made sense since I was saving all that gas money. Though there would still be gas for the Volt, I think I can justify the extra cost by reason of being able to take trips in it, while being able to mostly just use the battery for local driving.

Here's the tl;dr as it applies to this discussion: Does anyone know of the incentives that apply to the Volt? Are they the same as for the FFE - $7500? I've just barely started a tiny bit of the search tonight, so I haven't found other sources of info about it just yet and thought somebody here might have some info about the Volt.

You could also look at the C-Max Energi. It's all electric range is lower than the Volt but I think it has more cargo space & more passenger space. Its tax credit is $4001 since it has a smaller battery. The C-Max is built on the Focus platform so the interior is almost exactly the same.

 

[michael]

Our family fleet has one FFE and two Volts. You will be happy with either one provided it fits your driving needs.

My daily commute is about 40 miles each way, with charging available at work. I've put in 20,000 miles on my FFE in less than a year, it it serving me very very well.

My wife and daughter drive Volts...they can't deal with the need to work within the 70 or so mile range of the FFE. But frequently they go 50-60 miles in a day, burn gas in the Volt that they wouldn't have in the FFE. I feel a little limited by the Volts 40 mile electric range...burn gas more often than I would like.

Both cars have a purpose, and both are really, really good alternatives to an ICE or hybrid.

If you lease (which I strongly recommend) then you can have a zillion 7500 credits.

 

[EVA]

If you lease (which I strongly recommend) then you can have a zillion 7500 credits.

I'm guessing you were being ironic.

Just to be absolutely clear - if you lease, there is NO tax credit - no matter which car you lease. If you purchase the car you get the tax credit.

 

[airborne]

If you lease (which I strongly recommend) then you can have a zillion 7500 credits.

I'm guessing you were being ironic.

Just to be absolutely clear - if you lease, there is NO tax credit - no matter which car you lease. If you purchase the car you get the tax credit.

I welcome you to read the tax code. It is absolutely clear, if you lease, you are entitled to the tax credit, for the 2014 tax year.

 

[hybridbear]

If you lease the leasing company gets the credit. You benefit from it because the tax credit is used to lower the capitalized cost of the lease. You do not personally claim it on your taxes if you lease.

 

[EVA]

Is that brand new for 2014 taxes? I just read the 30D information from the IRS - and yes they say the car can be purchased or leased and you get the tax credit.

Something seems really wrong with getting $7,500 tax credit for a car that was leased before this went in effect. The person holding the lease already applied the $7,500 reduction to the lease cost. They got the credit already. Now I'm going to get the credit again?

Sorry it just makes no sense to me.

I guess when I file my taxes I'll figure it out. Maybe my tax bill will be tiny this year. I'll be getting two of those credits.

 

[airborne]

If you lease (which I strongly recommend) then you can have a zillion 7500 credits.

I'm guessing you were being ironic.

Just to be absolutely clear - if you lease, there is NO tax credit - no matter which car you lease. If you purchase the car you get the tax credit.

I welcome you to read the tax code. It is absolutely clear, if you lease, you are entitled to the tax credit, for the 2014 tax year.

Yep, I am wrong. That is the first time that has happened.

 

[WattsUp]

I welcome you to read the tax code. It is absolutely clear, if you lease, you are entitled to the tax credit, for the 2014 tax year.

No, sorry, you have misinterpreted whatever you read.

The tax code states that the federal credit is available only to the "original purchaser" of the vehicle. For a leased vehicle, the lessor is the original purchaser -- in other words, the dealership or its leasing agency (which is why they can offer a much lower lease price, as they are offsetting their costs with the credit).

The lessee of an EV cannot claim the federal tax credit.

This is clarified in plain language here:
http://www.fueleconomy.gov/feg/taxevb.shtml

Quoting: "(The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.)"

The instructions on federal tax form 8936 (for "Qualified Plug-in Electric Drive Motor Vehicle Credit") are also pretty clear:
http://www.irs.gov/pub/irs-pdf/f8936.pdf

Quoting: "The following requirements must be met to qualify for the credit: You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit"

 

[EVA]

Aw darn WattsUp, you crushed my dreams. For a short moment, I was $7500 richer. Oh shoot.

Hey thanks a million for looking at this more carefully. It just sounded way too good to be true. And you know, it was too good to be true.