Hello,
I got an IRS notice (CP10) for my 2019 return, which adjusted the amount of refund. In the notice, IRS calculates the AGI, taxible income, and total payments the same as turbotax. However, the total tax calculation is different.
After digging into the difference a bit more, I find that the difference amount is exactly the Part III of 8936, the credit for the personal use part of the vehicle.
Basically I purchased a Tesla 3 in March of 2019. The total credit for the car is $3750. Since I have a self-employed business (sole proprietor) and I use the car partially for the business, the credit is split between the business use and personal use based on the mileage (I use standard milage method in business).
The IRS considered the business portion of the credit but did not take into account of the personal portion of the credit. I understand that the credit cannot reduce my tax liability to be below zero. And that is not my case, I pay a lot of tax. I have read the instructions for 8936 carefully and I could not find anywhere saying that the personal portion of the credit could not be applied.
This really confuses me. Obviously turbotax accounts both portions of the credit. The questionnaire is straightforward enough that I don’t see any red flag.
Can you please help me figuring out the issue? Or it could be a mistake on the IRS side?
Thanks a lot!
btw, I tried to call IRS phone a number of times, but I simply could not get through, so I could not get any details on how they performed the calculation...
