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

SOLVEDby Intuit219Updated 6 days ago

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)

 

NOTE: Changes made to Form 8936 for TY23 include:

  • A new clean vehicle credit for new electric vehicles meeting specific requirements
  • A credit for previously owned clean vehicles
  • A credit for qualified commercial clean vehicles

Tax-exempt and governmental entities may also elect to treat their credits as a payment of income tax. However, credit for plug-in electric-drive motor vehicles is no longer available for vehicles placed in service after 2022 and final assembly of the vehicle must occur within North America for vehicles purchased after August 16, 2022. See here for more details.

For tax year 2023, Form 3800 is undergoing a major IRS rewrite that expands the form to 8 pages. This form is still in development, pending a future release. Form 1120S and 1065 filers that require Form 3800 may want to consider filing extensions.

New for tax year 2023:

  • Pre-filing registration requirement. If you intend to make an elective payment election and/or a transfer election on Form 3800, you must complete a pre-filing registration before you file your tax return.
  • Elective payment election. Beginning with tax year 2023, certain applicable entities and electing taxpayers can elect to treat certain IRA 2022 business credits as elective payments. Certain eligible taxpayers can elect to treat CHIPS 2022 credits as elective payments. Any overpayments may result in refunds.
  • Transferring credits. Taxpayers may make an election to transfer all or a portion of certain IRA 2022 credits.
  • See IRS instructions for 3800 for more information.

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

  1. Go to Screen 34, General Bus. & Passive Act. Credits.
  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 (Ctrl + T), 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

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

To generate Form 8936 in tax year 2023

  1. Go to Screen 34, General Business & Vehicle Credits
  2. If this is related to a business activity, in the Credits section, enter the Form (Ctrl+T) using the dropdown, the Activity name or number (Ctrl+T), and TaxpayerSpouse, or Joint (if applicable).
    • If this is not related to a business activity, continue to step 3.
  3. Locate the Clean Vehicle Credit (8936) section on the lower left panel, or by scrolling down.
  4. Begin by entering the Part I: Vehicle Details.
  5. Continue by answering the questions presented on Screen 34 in order.
  6. 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.

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

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