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

by Lacerte Tax 2023 Updated 2 months 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)

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

New for Form 8936 for tax year 2023:

  • 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.

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 for a 1040 module:

  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.
  7. If using the new Elective Payment option for tax year 2023 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.

1040 filers using the new Credit transferred or Gross elective payment fields will receive Critical Diagnostic ref 60077 until the calculations are ready and may want to file extensions for the upcoming 4/15 deadline.

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 for a 1065 module:

  1. Go to Screen 20.1, Fuel Tax Credits
  2. From the left side of the screen select Clean Vehicle Credits (8936).
  3. Begin by entering the Part I: Vehicle Details.
  4. Continue by answering the questions presented on the screen in order.
  5. 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.
  6. If using the new Elective Payment option for tax year 2023 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.
    • The 3800 will only generate for Partnerships if an Elective Payment or Transfer is used.

To generate Form 8936 in tax year 2023 for a 1120S module:

  1. Go to Screen 26.1, Fuel Tax Credits
  2. From the left side of the screen select Clean Vehicle Credits (8936).
  3. Begin by entering the Part I: Vehicle Details.
  4. Continue by answering the questions presented on the screen in order.
  5. 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.
  6. If using the new Elective Payment option for tax year 2023 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.
    • The 3800 will only generate for S Corporation if an Elective Payment or Transfer is used.
Lacerte Tax

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