Electric Vehicle Tax Credits

[Corduroy Frog]

From what I understand, the new credit for electric vehicles ($7500) beginning in 2023 extends even to used vehicles.  Even if the vehicle has been credited on someone else's return in the past!  Someone correct me if I'm wrong, because I'll be getting questions in December.  The powers that be must certainly want us to buy electric vehicles really bad.

This comment has evolved into another discussion entirely.  Probably should have started a new thread.

Edited July 1, 2023 by jklcpa
to move this portion from another topic.

[TexTaxToo]

Used vehicle credit can be taken only on first resale of a vehicle (VIN must be included on return) and is limited to $4000.  Only for sale by a dealer of a vehicle at least 2 years old (by model year) at a price less than $25k.  So maximum of two credits per vehicle, one new and one used.

[Sara EA]

How is the buyer of the used vehicle to know if the credit was claimed before?  The new EV rules make the credit easier and at the same time harder for everyone.  Easier for us is that we no longer have to search to see if a certain vehicle qualifies.  The rules are so complex about this or that material being sourced here or there in what percentages that now we can just tell clients to ask their dealer for credit eligibility.  Harder for us are the rules that will kick in later that the credit can be claimed at the dealership to lower the price of the vehicle if the purchaser chooses.  How many will take it when they buy and then "forget" when we do their tax return?  Will the IRS systems detect the double dipping?  There will be AGI limits too.  How many dealers won't even ask and give the buyer the credit to cinch the deal?  Will the IRS systems notice that?  Credits taken at the dealership are out of our hands, but of course any rejections will be our fault.

[Lee B]

Since the dealer has to report the VIN, the name and TIN of the buyer to the IRS, which they won't do if the dealer is claiming the credit on a leased vehicle

our clients may get confused but if the IRS can keep track and match the vehicle info with our clients tax returns there shouldn't be any double dipping.

[Corduroy Frog]

1 hour ago, cbslee said:

our clients may get confused but if the IRS can keep track and match the vehicle info with our clients tax returns there shouldn't be any double dipping.

IRS can do the matching after the return is filed (assuming they have the manpower to do so).  But going back to Sara, how are WE supposed to know when we are preparing the return?  Will our software be pre-loaded to disallow the e-filing because they have the same database as the IRS?  Maybe so, but that's asking a lot of the tax software.

[Max W]

Sellers of new and used EV's have to register with the IRS and issue a report to the buyer of an EV.

"Sellers of vehicles that are eligible for a new clean vehicle credit under IRC 30D must furnish a report to the buyer at the time of sale and then to IRS for those vehicles to be eligible for a credit under IRC 30D.  This includes manufacturers who sell directly to customers. 

Dealers who sell vehicles eligible for a used (previously owned) vehicle credit under IRC 25E must furnish a report to the buyer at the time of sale and then to IRS for those vehicles to be eligible for a credit under IRC 25E."

https://www.irs.gov/credits-deductions/clean-vehicle-credit-seller-or-dealer-requirements#SnippetTab

[Corduroy Frog]

Hopefully the client will bring this paperwork to the tax appointment.  For $4000 - $7500 he should have enough incentive to do so...

Thanks to all. 

 

[Sara EA]

It sounds like it should work IF the systems are up and running properly.  I remember the first year of the economic stimulus payments, when the IRS didn't have time to reprogram its systems so any return that claimed the credit had to be hand verified.  Many of those people had indeed gotten a stimulus payment but "forgot" or didn't notice because it was direct deposited.  The ones who actually didn't get a stimulus check had to wait months for their money.  For the EV credit, zillions of dealers will have to be educated and trained, and eventually have to start asking about AGI, while Congress is taking money away from the IRS.  What could go wrong?

[Medlin Software, Dennis]

When I looked at the form, the tp does not have to include documentation. Jurat is enough. Have not looked to see if the for mom has been updated.

Bought an eligible ev in feb. The credit is lot new, just revised for rules.