Not necessarily. The clean vehicle credit and other nonrefundable credits can't reduce your ordinary tax liability past zero. But just because you still owe taxes doesn't mean your ordinary tax bill is not already at zero. Your tax bill may include self-employment or other non-ordinary taxes. The message that says you don't qualify could be because of tax liability, but it could be something else.
You can check your Form 1040 to see if it is really your tax liability preventing the credit. Look on Line 18 to see your tax liability. Child tax credits get subtracted out on Line 19 and if you qualify for vehicle credits, they would get subtracted out on Line 20. What is on Line 22? If there is nothing left after subtracting out your other nonrefundable credits, then your tax liability prevents you from taking the credit. If there is an amount left after subtracting out the other credits, there is another reason why you are not qualifying for the clean vehicle credit. Do you have Form 8936 in your return?
The following additional requirements must be met to qualify you for the credit:
- You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee is entitled to the credit.
- You placed the vehicle in service during the tax year.
- The original use of the vehicle began with you.
- You acquired the vehicle for use or to lease to others, and not for resale.
- You use the vehicle primarily in the United States. If you use the vehicle primarily outside the United States, see section 168(g)(4) for a list of exceptions that may apply.
- Your modified adjusted gross income (AGI) for 2022 or 2023 is not more than $150,000 ($300,000 if married filing jointly or a qualifying surviving spouse; $225,000 if head of household). Use Part I of Form 8936 to figure your modified AGI.
The dealer/seller of a new clean vehicle (including a qualified fuel cell vehicle) must provide a report to you and the IRS providing information required to claim the credit, including the following:
- Your name and taxpayer identification number (TIN).
- The vehicle’s VIN.
- The battery capacity of the vehicle.
- Verification that the original use of the vehicle begins with you.
- The maximum new clean vehicle credit allowable for the vehicle.
This is a new vehicle with at least four wheels placed in service after 2022 that:
- Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 7 kilowatt hours and is capable of being recharged from an external source of electricity;
- Is manufactured primarily for use on public streets, roads, and highways;
- Has a gross vehicle weight rating (GVWR) of less than 14,000 pounds;
- Had its final assembly within North America;
- Has a manufacturer's suggested retail price of not more than $55,000 ($80,000 for a van, sport utility vehicle (SUV), or pickup truck); and
- Meets certain additional requirements discussed under New Clean Vehicle Certification and Other Requirements , later.
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