Form 8834, Qualified Electric Vehicle Credit vs. Form 8936, Plug-in Electric Vehicle Credit for ProConnect Tax

Form 8834, Qualified Electric Vehicle Credit

• You can use Form 8834 to claim any qualified electric vehicle passive activity credit allowed for the current tax year.
• This form only applies to qualified electric vehicle passive activity credits from prior years (allowed on Form 8582-CR or Form 8810 for the current year). For the current tax year, this credit would be allowed on:
  • Form 8582-CR, Passive Activity Credit Limitations (for individuals, trusts, and estates), or
  • Form 8810, Corporate Passive Activity Loss and Credit Limitations (for corporations)

To enter a prior-year carryover of this credit to generate Form 8834:

1. Go to Input Return ⮕ Credits ⮕ General Business and Vehicle Cr.
2. Scroll down to the Prior Year Unallowed Credits section.
3. Locate the grid under the Other Passive Credit Carryovers subsection.
4. For the Credit Type, select Qualified plug-in electric vehicle.
   • This is under the Form 3800, Part III, Line 1 Credits dropdown.
5. Enter the applicable amount in the General Business Credit column.

Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit

New for Form 8936 for tax year 2024:

• For vehicles placed in service after December 31, 2023, the seller must file the seller report through the IRS Energy Credits Online (ECO) portal.
• Transfer of new clean vehicle credit. For vehicles placed in service after 2023, you may be able to transfer the credit amount to the dealer. See the IRS instructions for more information. If you elect to transfer the credit, you must file Form 8936 and Schedule A (Form 8936) with your return for the tax year in which the vehicle was placed in service.

You can use Form 8936 to figure your credit for qualified plug-in electric drive motor vehicles you placed in service during your tax year. Also use Form 8936 to figure your credit for certain qualified two-wheeled plug-in electric vehicles acquired after 2014. 

The qualified plug-in electric vehicle credit attributable to depreciable property (vehicles used for business or investment purposes) is treated as a general business credit. Any credit not attributable to depreciable property is treated as a personal credit allowed against both the regular tax and the alternative minimum tax. 

Partnerships and S corporations must file this form to claim the credit. All other taxpayers are not required to complete or file this form if their only source for this credit is a partnership or S corporation. Instead, they can report this credit directly on Form 3800, General Business Credit, Part III, line 1y For more information see Generating Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit in ProConnect

To generate Form 8936 in tax year 2023 or newer for a 1040 return:

1. Go to Input Return ⮕ General Business and Vehicle Cr.
2. If this is related to a business activity, in the Credits section, enter the Form (Click on arrow to select from list) using the dropdown, the Activity name or number, and Taxpayer, Spouse, or Joint (if applicable).
   • If this is not related to a business activity, continue to step 3.
3. Select the Vehicle tab to get to the Clean Vehicle Credits (8936) section.
4. For tax year 2024 start by entering the Modified Adjusted Gross Income. This is required for 2024 returns.
5. Complete all fields in the Vehicle Details subsection
6. Continue answering the questions presented in this section in the order indicated by your selections.
7. Follow the directions on the input screen until you complete the input and generate the form, or until you see Stop here which indicates the vehicle doesn't qualify for a credit.
   • If Part II is needed, an entry is required for tentative credit amount to generate the form.
8. If using the Elective Payment option, use the new Elective Payment fields.
   • If filing an elective payment on the Form 3800 the IRS requires a registration number that you must complete before filing the tax return. See here for more information.

Additionally, make sure to review each blue note referenced on the page to determine whether or not it is applicable to your client.

To generate Form 8936 in tax year 2023 or newer for a 1065 return:

1. Go to Input Return ⮕ Schedule K ⮕ Credits ⮕ Clean Vehicle Credits (8936).
2. Begin by entering the Part I: Vehicle Details.
3. Continue by answering the questions presented on the screen in order.
4. Follow the directions on the input screen until you complete the questions and generate the form, or until you see Stop here which indicates the vehicle doesn't qualify for a credit.
   • If Part II is needed, an entry is required for tentative credit amount to generate the form.
5. If using the Elective Payment option use the Elective Payment fields.
   • If filing an elective payment on the Form 3800 the IRS requires a registration number that you must complete before filing the tax return. See here for more information.
   • The 3800 will only generate for Partnerships if an Elective Payment or Transfer is used.

To generate Form 8936 in tax year 2023 or newer for a 1120S return:

1. Go to Input Return ⮕ Schedule K ⮕ Credits ⮕ Clean Vehicle Credits (8936).
2. Begin by entering the Part I: Vehicle Details.
3. Continue by answering the questions presented on the screen in order.
4. Follow the directions on the screen until you complete the questions and generate the form, or until you see Stop here which indicates the vehicle doesn't qualify for a credit.
   • If Part II is needed, an entry is required for tentative credit amount to generate the form.
5. If using the Elective Payment option use the Elective Payment fields.
   • If filing an elective payment on the Form 3800 the IRS requires a registration number that you must complete before filing the tax return. See here for more information.
   • The 3800 will only generate for S Corporation if an Elective Payment or Transfer is used.