Ask The Experts: How do tax credits for electric vehicles work?
PEV: Plug-in Electric Vehicle
PEV: Plug-in Electric Vehicle
By Claudia Buck: McClatchy Newspapers
Tax credits for electric vehicles: That’s the topic asked this week by an “Ask the Experts” reader. The answer is from Internal Revenue Service tax expert Jesse Weller.
QUESTION: The Nissan Leaf all-electric vehicle advertises some sort of $7,500 tax break from the IRS. When I asked the Nissan salesman how the $7,500 tax credit works, I was instructed to ask my “tax man.”
So, tax man, here it is: I am self-employed and make estimated tax payments throughout the year. If I’ve done everything right, I should have little or no income tax liability on April 15. How then do I take advantage of the aforementioned $7,500? Is it a credit that carries over year to year? I suspect the $7,500 amount is not guaranteed.
ANSWER: The law provides a federal tax credit for qualified plug-in electric drive vehicles, which includes passenger vehicles and light trucks.
The credit for this type of vehicle originally was to expire in 2014 but was made permanent by the American Recovery and Reinvestment Act of 2009.
The maximum credit allowed for a vehicle bought after 2009 is $7,500. As of today, nine manufacturers of this type of vehicle have received IRS acknowledgment of their eligibility for the credit, and the amount that qualifies.
The list of qualified plug-in electric vehicles is on the IRS website at www.irs.gov/businesses (Search under “electric.”)
Source: The Kansas City Star
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Kelly Feb 21 2012 - 3:44 pm
The question was not answered properly.
We Volt owners know that we are entitled to the $7,500. tax credit.
But if you did not earn enough money to owe that much in Federal taxes, then the tax credit is not good and a total waste!! They should have made this a rebate instead.
Does the tax credit carry over??
“So, tax man, here it is: I am self-employed and make estimated tax payments throughout the year. If I’ve done everything right, I should have little or no income tax liability on April 15. How then do I take advantage of the aforementioned $7,500? Is it a credit that carries over year to year? I suspect the $7,500 amount is not guaranteed.”
Jennifer Feb 22 2012 - 11:19 am
Sorry Kelly, no the credit does not carryover. If you can not use a portion of the credit due to tax liability limits you will lose the unused portion of the credit. You will only receive the portion you are eligible for in the year the car was placed in service. The credit is UP to $7500.00 this does not mean that you will be eligible for the full amount. The amount you are eligible for will depend on the cetification you receive from the manufacturer. You also have to meet other requirements to be eligible for the credit. You can find these requirements if you go to IRS.Gov and look up the instruction for Form 8936 page 2 will explain the qualifications. Please keep in mind this is if you are using the vehicle for personal use and not business use. I hope this helps.
Jennifer Cardoza
Jacar Tax Services
909-912-1876