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.
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. The 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.
How to Generate Form 8936 for tax year 2023
- Go to Screen 34, General Business & Vehicle Credits
- 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 Taxpayer, Spouse, or Joint (if applicable).
- If this is not related to a business activity, continue to step 3.
- Locate the Clean Vehicle Credit (8936) section on the lower left panel, or by scrolling down.
- Begin by entering the Part I: Vehicle Details.
- Continue by answering the questions presented on Screen 34 in order.
- 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.
- 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.
How to generate Form 8936 for tax year 2022 and prior
The input for this form is located in Screen 34, General Business & Vehicle Credits, in the Clean Vehicle Credit section.
- In the field labeled 1 = alternative motor vehicle (8910), 2 = plug-in electric drive motor vehicle (8936), enter a 2
- Enter the Date placed in service
- Enter Kilowatt hour capacity (vehicle with at least four wheels (8936) (x.xxx)
If you can't use part of the personal portion of the credit because of the tax liability limit, the unused credit is lost. The unused personal portion of the credit can't be carried back or forward to other tax years.
