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A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?

The dealer believes that the credit only applies to the additional payment (if any) which you owe when you file, on top of any withholding. He must be misunderstanding, but I thought I'd check.
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Level 15

A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?


@davidleonardcook wrote:
The dealer believes that the credit only applies to the additional payment (if any) which you owe when you file, on top of any withholding. He must be misunderstanding, but I thought I'd check.

Perhaps the dealer just phrased it poorly. This particular tax credit is a nonrefundable credit (see link below); if you have no tax liability the credit is useless (i.e., the credit is not "refundable").

 

https://turbotax.intuit.com/tax-tips/going-green/filing-tax-form-8936-qualified-plug-in-electric-dri...

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Level 15

A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?

Ask the car dealer to show you his certification paperwork for being a Tax Professional of any type. They can't. Ignore the dealer, ask your CPA. The dealer is quite obviously clueless beyond help. So quit wasting your time with tax questions with the dealer.  Qualifying for the credit has "NOTHING WHAT_SO_EVER" to do with "ANY" refund amount shown on line 20 of the 2019 IRS Form 1040. It has "everything" to do with your total tax liability as shown on line 16 of the 2019 IRS Form 1040.

 

Level 15

A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?


@davidleonardcook wrote:
The dealer believes that the credit only applies to the additional payment (if any) which you owe when you file, on top of any withholding. He must be misunderstanding, but I thought I'd check.

Perhaps the dealer just phrased it poorly. This particular tax credit is a nonrefundable credit (see link below); if you have no tax liability the credit is useless (i.e., the credit is not "refundable").

 

https://turbotax.intuit.com/tax-tips/going-green/filing-tax-form-8936-qualified-plug-in-electric-dri...

View solution in original post

Anonymous
Not applicable

A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?

you also don't get the credit if you lease the vehicle. the credit goes to the lessor. 

Level 14

A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?

And you cannot carry forward (or backward) the unused portion of the credit to other tax years.  See the instructions for Line 23 in this reference:

https://www.irs.gov/instructions/i8936

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

Level 15

A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?

The credit is non-refundable, which means you can't get paid if the credit is more than your tax liability.  But that's not the same as a refund.  For example, if you paid $10,000 in withholding on your pay checks and get a $2000 tax refund, then your tax liability was $8000.  If the same person had only $7,000 of withholding and owed $1,000 on April 15, their tax liability is still $8,000.  Your tax liability is shown on line 16 of the 2019 form 1040.  As long as the liability is more than the credit, the credit will be fully refunded to you in the year you bought the qualifying vehicle.  If the credit is more than your liability, it will be refunded up to your liability and the rest will carry forward to the next year  is lost.  (Some credits carry forward, this one does not.)

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Level 15

A car dealer claimed the tax credit for Electric Vehicles is not available if the taxpayer gets a tax refund. That's ridiculous, right?

Re the carryforward (or carryback), the instructions are fairly clear on that point:

 

If you cannot 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 cannot be carried back or forward to other tax years.

 

See https://www.irs.gov/instructions/i8936#idm139731186313024

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