Critical 2025 EV Tax Credit Calculation Flaw

[matt1235]

I contacted TurboTax support today to inform them about a calculation and logic flaw in the determination of eligibility of the 2025 EV tax credit.  I want to ensure that this issue is highlighted for the benefit of the community as I do not have confidence that Intuit or TurboTax will take action to correct this issue in the software after my interaction with the support team.

Pursuant to IRS guidance in FAQ FS-2025-05 section 3 dated 8/21/2025, from IRS announcement IR-2025-86, linked below, the following text is clear about eligibility in a specific circumstance:

3. What effect does “acquisition” of a vehicle have on a taxpayer’s ability to claim a credit under sections 25E, 30D, and 45W?

Acquiring a vehicle prior to the termination date is an initial step, but acquisition alone does not immediately entitle a taxpayer to a credit. Sections 25E(a), 30D(a), and 45W(a) require the vehicle be “placed in service” to claim the respective credit (see IRS.gov for additional requirements). If a taxpayer acquires a vehicle by having a written binding contract in place and a payment made on or before September 30, 2025, then the taxpayer will be entitled to claim the credit when they place the vehicle in service (namely, when they take possession of the vehicle), even if the vehicle is placed in service after September 30, 2025. Taxpayers should receive a time of sale report from the dealer at the time they take possession or within three days of taking possession of the vehicle.

https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-...

According to this, if a taxpayer enters a "written binding contract" and makes a payment on or before 9/30/2025, that taxpayer is eligible to take the credit even if the vehicle is placed in service after 9/30/2025.

In TurboTax, the user is only permitted to enter two dates, one is the "Sale Date" and the other is the "Placed in Service Date".  If a user enters a "Placed in Service Date" after 9/30/2025 and enters a "Sale Date" before the expiration of the tax credit, TurboTax will determine the taxpayer ineligible for the credit and not apply the credit.

The "Sale Date" may be different than the "Written Binding Contract" and "Payment" dates on form 15400.  TurboTax can and should honor IRS guidance by allowing the user to enter the "Written Binding Contract" and "Payment" dates reported on form 15400 so that TurboTax can accurately determine taxpayer eligibility for the EV tax credit in 2025 while being consistent and compliant with this clear IRS guidance.

Anyone else see this problem?

[user17691990447]

Yes, I experienced this problem yesterday and posted something similar to your post. If I enter the actual purchase and placed into service dates (9/29/2025 and 10/21/2025), Turbotax says I'm not eligible for the credit. If I change the placed into service date to 9/29/2025, Turbotax calculates the credit correctly.

I'm surprised that Intuit didn't get this right on the first try since the IRS guidance is very clear that eligibility is based on purchase date but seems like it should be an easy fix to correct this in the software. Did they give you any estimate for when this will be corrected?

[matt1235]

They did not give me any estimate.  I was on the phone for over an hour and frankly they appeared to disregard the issue.  The representative bluntly suggested that I should take the issue to the forums.

I was dissatisfied due to the fact that it is very easy to look up this guidance, and at the time the guidance was issued it actually made headline news.  I provided the exact same IRS documents to TurboTax/Intuit but they appear to not be taking it seriously.  They do not issue a ticket that can be tracked for the issue so there is no follow up mechanism for the consumer.  I hope they implement a fix quickly.

Even ChatGPT is able to acknowledge the IRS guidance reference and concludes that the tax credit is applicable if a binding contract with payment happened before 9/30/2025 and the vehicle was placed in service after 9/30/2025.

One interesting nuance is in form 8936 it doesn’t even have a date field, so it appears TurboTax is using internal logic not reported on the form, and their internal logic appears incomplete because it does not account for the IRS guidance.

[user17691990447]

Just out of curiosity, I tried to report this bug through the Turbotax help chat and this is the response I received:

"For the Clean Vehicle Credit in tax year 2025, eligibility is based on the date the vehicle is placed into service, not just the purchase date. The credit applies to vehicles placed into service on or before September 30, 2025. Vehicles purchased before October 1, 2025, but placed into service after that date generally don't qualify.

The credit rules specify that the vehicle must be new and meet other criteria like final assembly in North America and MSRP limits.

In summary, it's the placed into service date that determines credit eligibility, not strictly the purchase date."

This response from Intuit help chat is obviously completely incorrect based on the IRS guidance you referenced in your post as well as the extensive media coverage prior to the deadline confirming that buyers did not need to take possession of the vehicle prior to the deadline to receive the credit.

Do Intuit employees monitor this forum? As you pointed out, this is a significant bug in the software so it would be nice if someone from Intuit could acknowledge the problem and confirm that it will be addressed.

[matt1235]

Correct, I received a similar response, and it is factually incorrect and not consistent with IRS guidance.  I was told that Intuit does monitor these forums and that the more community noise is generated about an issue like this, the more likely they are to fix it.

The defining date is the “acquisition date”, which is defined as a binding contract combined with a payment.  This is my interpretation of IRS guidance and seem to have broad support on all sources, but TurboTax software does not follow this guidance or allow for a check that this condition was met and categorically denies the credit even though the taxpayer qualifies.

[DoninGA]

Deleted

[matt1235]

Wanted to bump this issue for resolution.  I may have to use another platform if TurboTax does not support this functionality.

[user17691990447]

Thanks for bumping this. I have to say that I'm disappointed that no one from Intuit has even acknowledged that this is being investigated given that this software error would have resulted in me overpaying $7500 in federal taxes if I wasn't familiar with actual IRS rules for credit eligibility.

[matt1235]

Totally agree.  Not sure Intuit will fix this.  I got an email asking if your post answered my question.

I'm hoping someone will see this and correct the error in the software.

[user17691990447]

That's funny since neither of us are asking a question, rather we are pointing out that there is a significant problem in the Turbotax 2025 software and that the information provided by the help chat regarding credit eligibility is flat out incorrect. Eligibility for the credit is determined by the answer to question 5 on Schedule A (Form 8936) "Does the VIN entered on line 2 belong to a new clean vehicle acquired after 2022 and before October 1, 2025 and placed in service during the tax year?" The only significance of the placed in service date is to determine which tax year the credit is requested/reported.

[matt1235]

They need to add more significant logic than just the “sale date” in order to capture what the IRS means by acquired.  They have made it very clear that it means a written binding contract with a payment, which can be nominal prior to their deadline.

TurboTax uses a woefully inadequate calculation of the “sale date” in isolation to determine eligibility.

Their interview does not fully capture all the required information to determine eligibility and therefore for us, we have paid for software we cannot use.

i am very disappointed and dissatisfied.

For what it’s worth, ChatGPT is saying that FreeTaxUSA uses a more comprehensive logic and allows for e-filing.  I am trying to determine what my options are, and this seems to be the best.

a second alternative would be to use TurboTax to complete the return, except for this particular form, and completing that accurately outside the software and sending a paper return to the IRS, but this is highly undesirable because of the delays associated with paper return processing.

The third option would be to use a paid preparer who can actually do this correctly,

What a let down and shame that TurboTax doesn't do this properly for taxpayers.

[user17691990447]

Not that I'm recommending this, but a fourth option is to list a date prior to October 1, 2025 for the placed into service date. When I do that, the credit is calculated correctly.

I'm hesitant to submit information that doesn't match the report provided by Tesla but I guess if audited, I could just explain that Intuit refused to correct their defective software.

I'm still hoping that this will be corrected within the next few weeks. You would think Intuit would be facing a class action lawsuit if a significant number of customers overpay $7500 in federal taxes due to an error in their software and incorrect advice provided by their help chat.

[user17691990447]

Quick update in case you haven't abandoned Turbotax and moved on to a different software. I did finally get a response from an Intuit employee to my post regarding the issue and have provided a file for them to review. One additional development is that starting today, when I save a file with the actual placed into service date (10/21/2025), the next time I open the file, the placed into service date has been automatically changed to match the purchased date. I'm fairly certain this wasn't happening before, but I also don't remember getting any indication that the software had been updated.

[user17696563479]

Yes, I am also experiencing the same problem.  I agree with your assessment, as I went through the IRS publication. Thank you for posting.  I hope to see it addressed soon.   Following....

[matt1235]

I will check if the behavior has changed this weekend in the software.

chatGPT is recommending not using any dates that differ from the form the manufacturer provided.  I think this issue makes TurboTax a full brick for users impacted by this issue.

Anyone else seeing their tax credit denied by TurboTax due to this flaw?