EV Credit

[Duane Anderson]

Taxpayer leased a 2023 Jeep Wrangler in May 2023 and the dealer indicated it qualifies for the Federal TAx Credit for Electric Vehicles.....When I try to enter the information in my software, a message comes up that it no longer qualify's.....Please confirm which is correct?

PS...$26,300 was paid at closing and the lease is 36 months

Thank you,,Duane Anderson

[Uncle Sam]

I checked this the other day - you must OWN the vehicle in order to qualify for the credit, not lease it.

[TaxGuyBill]

$26,300 at closing? There can be huge variance in prices depending the trim, but have you looked if this is actually a true "lease" or if it is a Capital Lease, which is the equivalent of owning it?


Did the dealer give your client the 'form' that states the amount of the credit it qualifies for?

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

What software are you using and what exactly is the message that says it does not qualify?

[Duane Anderson]

The software I use is Drake.....and the message for IRS Form 8834 that comes up is: EV credit has expired for current year. Credit only applies if passive carryover from prior year.

Thanks,,,Duane Anderson

[TaxGuyBill]

I think you are looking at the wrong form. I think you are looking for Form 8936.

But you first need to look at it is actually true lease (the client could buy it at Fair Market Value at the end of the lease) or if it is really a sale (the client could buy it for practically nothing at the end of the lease).