Do I receive 2023 EV tax credit if I placed a pre-order on 07/2022 but the car will be delivered in 2023? Deposit is paid and VIN is available.

[mashhadi18]

Hello,
I received a brief written document from my BMW dealership that states a preliminary buyer's order on 7/17/2022 for a 2023 BMW i4 , VIN xxx with retail price of $xx. I paid a deposit for this car but the car is still in transit and will be delivered to me in January or February. 
I was wondering if I can claim EV tax credit in 2023 since my deposit took place before the new tax law (IRA). 
Will this document be enough as a binding contract?

[Mike9241]

it may not matter under the new rules

per the iRS

If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement.

this would seem to imply if you take delivery in 2023 the new rules apply.

1) Use it primarily in the U.S.
2) In addition, your modified adjusted gross income (AGI) may not exceed:

$300,000 for married couples filing jointly
$225,000 for heads of households
$150,000 for all other filers
You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. 

Qualified Vehicles
To qualify, a vehicle must:

1) Have a battery capacity of at least 7 kilowatt hours
2) Have a gross vehicle weight rating of less than 14,000 pounds
3) Be made by a qualified manufacturer. 
4) Undergo final assembly in North America (isn't the i4  assembled in Germany) 
5) You buy the vehicle new
6) The seller reports required information to you at the time of sale and to the IRS.
7) In addition, the vehicle's manufacturer suggested retail price (MSRP) can't exceed:

$80,000 for vans, sport utility vehicles and pickup trucks
$55,000 for other vehicles 

if you have questions, call the dealer. 

[mashhadi18]

Thanks for the reply!

May I know more about "before January 1, 2023"? I cannot find that date anywhere.

[Mike9241]

https://www.irs.gov/credits-deductions/credits-for-new-electric-vehicles-purchased-in-2022-or-before 

[AK-22]

@Mike9241 I do read this different. See a partial copy of the IRS site to linked here:

Purchase date vs. delivery date

If you entered a written binding contract to buy a vehicle after December 31, 2021, and before August 16, 2022, but took delivery on or after August 16, 2022, you may elect to claim the credit based on the prior rules.  To elect the credit under the prior rules you must elect the credit on your 2022 tax return after you take delivery of the vehicle.  Depending on the date the vehicle is delivered, you can claim the credit on your original, superseding, or amended 2022 tax return. 

If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, 

As marked blue & underlined there is no restriction for the EV to be delivered before December 31, 2022 in case the binding contract was in place before August 16, 2022. That is only mentioned at the end of the paragraph which refers to purchases between August 16 and December 31. It makes sense that we can still claim the credit for binding orders before 8/16/2022 if the car is delivered only in 2023. Otherwise IRS' reference to an "original, superseding, or amended 2022 tax return" would not make sense.

Turbo tax does not accept a date placed in service in 2023. I believe this is not correct based on the above. How can we do this?

[MichaelG81]

No, as stated on form 8936 Credit for EV Vehicles it states: Note: This credit is for qualified plug-in electric drive motor vehicles placed in service before 2023, qualified two-wheeled plug-in electric vehicles acquired before but placed in service in 2022, and new clean vehicles placed in service after 2022. See separate instructions for vehicle definitions and other requirements.

For other requirements, see here.

@AK-22 

[AK-22]

Thank you @MichaelG81 

However, I think there is justification for a different interpretation:

The instruction for form 8936 states one should enter 08/15/2022 if you qualify and elect to apply the transition rule discussed below.

Transition rule.

 If you purchased, or entered into a written binding contract to purchase, a qualified plug-in electric drive motor vehicle after 2021 and before August 16, 2022, you may elect to treat such vehicle as having been placed in service on August 15, 2022, the day before the enactment date of the Inflation Reduction Act of 2022.

[AmeliesUncle]

---

@AK-22 wrote:

you may elect to treat such vehicle as having been placed in service on August 15, 2022, 

---

Exactly.  Treat it as placed in service on August 15th, 2022.

[GOTK]

There seems to be different interpretations to this. What is the final agreement on this? Does Turbotax allow this to be done in its forms for the 2022 tax year? Entered binding agreement before August 16, 2022, vehicle delivered and placed in service on Aug 2023.

[NCperson]

@GOTK if you took delivery of the vehicle in 2023, then that goes on the 2023 tax return - not 2022 tax return. 

See "purchase vs delivery date"

https://www.irs.gov/credits-deductions/credits-for-new-electric-vehicles-purchased-in-2022-or-before

[GOTK]

But that's not correct! The link you sent (purchase vs. delivery date section) does not say anything about car being delivered in 2023 (unless for orders after Aug 16, 2022). See this: If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, ...

So, Turbotax is not gonna fix this to allow me and many others to use the tax advantage?

[Mike9241]

there is nothing wrong with Turbotax it is following IRC 30D (a) as follows

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each new clean vehicle placed in service by the taxpayer during the taxable year.

The date ordered affects the rules for determining if the vehicle qualifies for the credit but no credit is allowed until the year placed in service as state in IRC 30D(a). 

[GOTK]

The below from 30D(d) says differently:

Section 13401(l) of the IRA provides a transition rule for a taxpayer who purchased or entered into a written binding contract to purchase a new qualified plug-in electric drive motor vehicle (as defined in section 30D(d)(1) of the Code, as in effect on the day before the date of enactment of the IRA (August 15, 2022)) after December 31, 2021, and before the date of enactment of the IRA (August 16, 2022), and placed such vehicle in service on or after the date of enactment of the IRA. The transition rule provides that such a taxpayer may elect (at such time, and in such form and manner as the Secretary may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of the IRA.

[NCperson]

@GOTK suggest calling the IRS.  they are the ones that wrote the FAQs I posted.  No one on these board wrote them,  You are arguing with the wrong parties.  

what page of the link below is your reference? I can't find it 

https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376rh.pdf

[GOTK]

I will call them too. But, I do want to use TurboTax for my amendment, and it currently does not let me do it. Or maybe I have to put 2022 when it asks when was this vehicle placed in service, as the IRS note I sent mentioned and other users mentioned above? This is from section "F. IRA Applicability Dates" of this link which is what you said I should look into:

https://www.federalregister.gov/documents/2023/04/17/2023-06822/section-30d-new-clean-vehicle-credit

Published document by IRS in April 2023, Section 30D New Clean Vehicle Credit