Electric Vehicle Tax Credit For 2020
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Is there a Credit for Buying a New Electric Vehicle?
If your purchased an electric or alternative motor vehicle in 2020, you may be able to claim credit on your 2020 Tax Return. You may also be able to amend a tax return to claim credit if you purchased it in a previous year and owed taxes. This credit is nonrefundable and will only offset your tax liability for a given tax year.
The Qualified Plug-In Electric Drive Motor Vehicle Credit can be worth up to $7,500 in nonrefundable credit.
These vehicle tax credits are available for 2020 Tax Returns:
When you prepare and e-File your 2020 Tax Return on eFile.com, you don't need to worry about which of the credits above you qualify to claim on your tax return. Simply answer a couple of questions and the eFile app will select the correct tax credit form(s) for you to complete. The app will also calculate and enter your credit amount on your return. See how much your 2021 Refund could be and prepare to prepare for Tax Day, April 15 May 17, 2021. Read on to learn more about these credits.
Qualified Plug-In Electric Drive Motor Vehicle Tax Credit
You may be able to claim a tax credit for placing a new, qualified plug-in electric drive motor vehicle into service. Generally, most electric vehicles qualify for the credit, but there are some criteria. This is a vehicle that, under IRS Section 30D, weighs less than 14,000 pounds, runs significantly by an electric motor, draws electricity from a battery that holds at least 4 kilowatt hours, and is capable of being recharged from an external source of electricity. This means it cannot be a traditional hybrid vehicle, or HEV, as it does not draw power externally. See information regarding hybrids and plug-in hybrids that may qualify for the credit.
The vehicle in question must be purchased new - it cannot be used and/or leased for you to receive the credit. The IRS tax credit ranges from $2,500 to $7,500 per new electric vehicle (EV) purchased for use in the U.S. beginning on January 1, 2020. This nonrefundable credit is calculated by a base payment of $2,500, plus an additional $417 per kilowatt hour that is in excess of 5 kilowatt hours. This value cannot exceed $5,000, thus limiting the total credit to $7,500. (Note: a nonrefundable credit is an amount that only goes towards the tax payer's tax liability. If you are expecting to owe $5,000 in taxes, but file for a $7,500 credit from a recently purchased electric car, you would expect to see $5,000, eliminating the difference of $2,500).
This credit can also be applied to a two-wheeled vehicle if certain circumstances are met. These are:
- The vehicle was purchased new,
- It can reach a speed of 45 miles-per-hour or more,
- It draws significant power from an electric motor,
- The battery has a minimum capacity of 2.5 kilowatt hours,
- It can be charged externally, and
- The vehicle weighs less than 14,000 pounds.
The credit for two-wheeled vehicle can be claimed for 10% of the cost of the vehicle in consideration up to a maximum of $2,500.
Does this Vehicle Tax Credit Run Out?
The credit will begin to phase out when at least 200,000 qualifying vehicles manufactured by each company have been sold in the U.S. As of December, 2020, the only two companies to begin phasing out are Tesla and General Motors. Once the process has begun, purchasers of electric vehicles are eligible to claim 50% of the credit if the vehicle was acquired in the first two quarters that the 200,000 limit had been reached. If filing for a vehicle purchased in the second two quarters, file for a nonrefundable credit amounting to 25% of the original amount. To see an example of this, find the amounts for General Motors or Tesla in the table below.
To claim the credit on eFile.com, you can prepare and eFileIT Form 8936 along with Form 1040. Once you answer a few simple questions about your tax situation, we will generate the forms for you and help you complete them accurately. If you bought a qualifying vehicle in the past 3 years and you did not claim it on your tax return, you can still get the credit by filing an amended return. Claim this credit when filing your 2020 Tax Return on eFile.com.
Additionally, the tax credit does not carryover or carry forward if you do not use it in the year you purchased the vehicle. In other words, if you did not use the part of the personal portion of the EV tax credit, then the unused credit is lost.
Vehicles that are Eligible for the Credit
All of the following electric vehicles qualify for the credit for Qualified Plug-In Electric Drive Motor Vehicles. They have different credit amounts depending on the power output of the battery:
AMP Electric Vehicles, Inc.
GCE and MLE (2012)
Audi of America, LLC
e-tron SUV (2019); Sportback (2020);
Azure Dynamics, Inc.
Transit Connect Electric Vehicle (2011, 2012)
BMW of America
i3 Sedan (2014-2020)
BMW of America
MINI Cooper S E Hardtop (2-Door) (2020)
Boulder Electric Vehicles, Inc,
Delivery Van DV-500 (2013);
Electric Shuttle DV500 (2013);
Electric Flat Bed DV-500 (2013);
Electric Service Body DV-500 (2013)
e6 Electric Vehicle (2012-2017)
Sedan (2010, 2012)
Electric Vehicles International
(EVI)-MD (Medium Duty) Electric truck (2011, 2012);
EVI-WI (Walk-In) Electric truck (2011-2012)
Electronic Motor Cars
EMC Model E36 7 Passenger Wagon (2010);
Model E36t Pick-Up truck (2010);
Model E36v Utility Van (2010)
FCA (Fiat, Chrysler Automobiles) North America Holding, LLC.
Fiat 500e (2013-2020)
Ford Motor Company
Focus EV (2012-2018)
General Motors, LLC.
Chevrolet Bolt (2017-2020);
Chevrolet Spark EV (2014-2016);
*$$7,500 if acquired through 3/31/2019;
$3,750 (4/1/2019 - 9/30/2019);
$1,875 (10/1/2019 - 3/31/2020)
Ioniq Electric Battery Vehicle (2017-2020); Kona EV (2020)
Jaguar Land Rover North America, LLC.
I-Pace (First Edition, HSE, SE, S models) (2019, 2020);
I-Pace (HSE, SE, S models) (2020)
EX3 (2019-2021); K22 (2019, 2020);
K23 (2020-2021); K27 (2020-2021
Kia Motors America, Inc.
Soul Electric (2015-2020); NIRO EV (2019-2020)
Mercedes-Benz USA, LLC
B-Class EV (B250e) (2014-2017);
smart fortwo EV (2013-2018);
smart EQ fortwo Cabrio (2019);
smart EQ Fortwo Coupe (2019)
Mitsubishi Motors North America, Inc.
i-MiEV (Electric Vehicle) (2012, 2014, 2016, 2017)
Nissan North America
Polestar Automotive USA Inc.
Polestar 2 (2021)
Porsche Cars North America, Inc.
Taycan 4S; Turbo EV; Turbo (S) EV (2020)
Roadster (2018-2011); Model S (2012-2019);
Model X (2016-2019); Model 3 Standard Range (Plus) (2019-2020);
Model 3 Long Range (2017-2019);
Model 3 Long Range AWD and AWD Performance (2019);
Model 3 Mid Range (2018-2019)
$7,500 if acquired through 12/31/2018;
$3,750 (1/1/2019 - 6/30/2019);
$1,875 (7/1/2019 - 12/31/2019)
Think City EV (2011)
Toyota Motor Sales, U.S.A., Inc.
RAV4 EV (2012-2014)
Volkswagen Group of America
Volvo Cars of North America, LLC
XC40 Recharge Pure Electric P8 AWD (2021)
Wheego Electric Cars, Inc.
LiFe EV (2011)
Zenith Motors, Inc.
Electric Van (2014-2017); Electric Minibus (2016-2017)
*Companies who have initiated phasing out indicate different, decrementing values based on the year purchased. Currently, only General Motors and Tesla have begun this process.
See a list of qualifying plug-in hybrids.
In addition to these nonrefundable credits, different states offer rebates to encourage taxpayers to invest in electric vehicles. For example, California offers a cash rebate up to $2,000 for a taxpayer who purchases a new electric vehicle.
Should an electric vehicle be purchased for business purposes, it may be eligible for the credit and claimed on Form 3800, General business Credit - eFileIT.
Do you own any of the vehicles in this list or want to invest in one? Get the most out of that purchase when you file your taxes for 2020. Claim the credit online on Form 8936 - eFileIT on eFile.com.
Alternative Motor Vehicle Tax Credit
The Alternative Motor Vehicle Tax Credit can be claimed for placing a qualified fuel cell vehicle in service and may only be claimed by the original purchaser of the vehicle. A qualified fuel cell motor vehicle is a vehicle propelled by power from one or more cells which convert chemical energy directly into electricity. Currently, hydrogen fuel cell electric vehicles qualify. The credit can be claimed for cars purchased in 2018, 2019, or 2020. eFile.com can be used to generate the information for Form 8910 - FileIT - to claim the credit and attach it to your 2020 Tax Return. You can prepare and file these forms on eFile.com. Once you answer a few simple questions about your tax situation, we will generate the forms for you and help you complete them accurately.
For Tax Year 2020, only partnerships and S corporations should report it on Form 3800, General Business Credit. Other taxpayers, when filing on eFile.com, will use the eFile app to report the information on Form 8910, Alternative Motor Vehicle Credit, to claim any credit they receive from a partnership whose tax year began in 2018 or 2019 and ended during the 2020 Tax Year - FileIT.
Below is a list of some certified fuel cell motor vehicles that may qualify for the credit:
- 2008-2012 Honda FCX Clarity
- 2016 Honda Clarity Fuel Cell
- 2018 Hyundai Nexo
- 2020 Toyota Mirai II
- 2020 Hyundai Xcient Fuel Cell
Refer to the vehicle's manufacturer for certification of the vehicle's status as a qualified alternative motor vehicle. The manufacturer should be able to provide a copy of the certification letter from the IRS.
Similarly to electric vehicles, states offer incentives for purchasing alternative motor vehicles. California, for example, may offer a rebate worth up to $4,500.
Find out how to claim tax credits for energy-efficient improvements to your home or other home improvement deductions. In addition, see other tax credits and tax deductions that you may qualify to claim on your tax return. When you prepare and e-file your return on eFile.com, the eFile app will select and enter any deductions and credits you qualify for on your tax return. Please contact eFile.com support if you have further questions or need more help with your 2020 Tax Return.
See also: can I claim a tax credit for a hybrid or plug-in hybrid?
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