I did not qualify for the used EV tax credit that was transferred to the dealer. There was a mutual misunderstanding of the AGI requirements. When I enter the vehicle on TurboTax it just says I don't qualify. I know I owe the $4000 credit and need to see it reflected on TurboTax.
Please clarify - where did you receive this credit from? In order to owe it back to the IRS they have to have sent you the money in the first place and it doesn't sound like they did. This sounds like something that you need to work out with the dealer.
Thank you for replying.
New as of 2024 was the ability to transfer the clean vehicle tax credit directly to the dealer in lieu of receiving it yourself. When you do this, the dealer credits that tax credit at the point-of-sale, so in this case, they took $4,000 off the price of the car since I was transferring the tax credit to them.
Herein lies the issue - I did not qualify for the tax credit. So I transferred a $4,000 credit that I was not eligible for to the dealer. I know I am going to be on the hook for the $4,000 and based on research I've done, I can find no answer other than I'll owe it to the IRS. TurboTax doesn't handle this situation.
I don't see why you think you would owe this to the IRS?
The dealer took the credit from you and reduced the price of the car for you. So instead of paying $150K you paid $146K. Then the dealer gave you forms to fill out transferring the credit to them.
Once you did that the dealer filed the forms with the IRS to receive the credit. When you file your return and are not eligible for the credit the IRS will send a notice to the dealer rejecting their request for that credit. NO MONEY WILL GO ANYWHERE.
The dealer then needs to contact you and let you know that the $4000 reduction in price that you got is no longer valid and they need you to give them $4000. That is up to the dealer to handle - not you and certainly not on your tax return.
If you agreed to this deal because of bad advice that you got from this dealer I would gather all of the documentation showing that they gave you bad advice and get ready for an argument.
Either way this is not an issue for your tax return.
Question 21 from the IRS website indicates I need to pay this back to the IRS:
IRS.gov: When do buyers need to repay tax credits transferred to the dealer?
This is the basis of my question. I know that I need to pay it back to the IRS. The dealerships have no more skin in the game once you attest your income qualifies at the dealer. They get the money regardless from the IRS.
I am thinking TurboTax is just not set up to handle this situation since I cannot pay the IRS back the $4,000, as they advise to do on their website.
If it helps, I have some clarity.
I need to file a Schedule 2 (Form 1040) for 2024. The form from the IRS has the relevant section needed for my to repay the credit I did not qualify for.
TurboTax however does not have the correct questions in place / scenario needed for the Schedule 2 for 2024. Therefore, paying this specific credit back from TurboTax is not possible at this time.
Wow, you're right. The IRS is simply paying this credit to the dealers. Sorry, I should have looked that up.
There isn't a tax form to add this in in the TurboTax system. The 8936 will just reject your credit if your AGI was too high in 2024 (and in 2023 - you can use the prior year's AGI). If that is the case then you need to send in the $4000 as a payment to the IRS in addition to your taxes.
TurboTax has a lot of options to add additional tax to your payment but none of them are repaying this credit. I suggest making a separate payment to the IRS here. When it asks for the reason just enter 'Balance Due'.
You can also wait for the letter from the IRS to arrive. That will have a payment coupon associated with it.
No worries at all! This is new to everyone, so I am sure there will be additional questions. It was a great lesson for me to pay attention to details and not rely on a dealership trying to sell me something to give correct tax advice.
Thank you so much for taking the time to reply.
am I to understand that TurboTax will NOT be coding the repay of a dealer transferred credit? there are forms for this, namely:
SCHEDULE 2 (Form 1040), line 1b (Repayment of new clean vehicle credit(s) transferred to a registered dealer from Schedule A (Form 8936))
and there are several other folks following this, see
I'm in the same boat. I transferred the EV credit to the dealer but my AGI was $6,000 over the limit. I need to repay this but Turbotax doesn't have the option to do it. Would be nice if turbotax fixed:
to recalculate the refund / tax owed amount.
Expanding on this... I transferred my $4000 credit to the dealership but our joint income has increased during the year so we no longer qualify. My wife and I recently purchased a house and our first year of mortgage interest is over $32,000.
We made $190,000 and our Federal Income tax total is $25,482. Since we have $6,000+ of mortgage interest deductions to spare ($32,000 - $25,482 = $6,518), do I have to pay back the $4000 EV Tax to the IRS or can I still simply leverage the remainder of my mortgage interest amount for this now owed amount?
issue is 'diligently ' being worked:
I did eventually find a solution, although it's a stupid one. I called support until I found a representative who upgraded me to TurboTax Deluxe Desktop for free. Unfortunately it still has the same issue as Deluxe Online BUT if you switch to forms mode you can open Form 1040 Schedule 2 and double click on Line 1b. That will open up Form 8936 and Form 8936 Schedule for you to fill out yourself.
In my mind this defeats the whole purpose of paying for TurboTax in the first place. If I wanted to fill out the forms myself, I would have just started with that. I'm not using TurboTax next year.
@abigailjeske Were you then able to file online or did you have to print everything and mail the forms in? I saw another user mention H&R block will do the calculation and file electronically, but I want to see if turbotax can get this fixed before i do that. I've been using turbotax for YEARS and really don't want to switch if I don't have to.
@Subliminll Yes, I was able to e-file from the desktop version.
there may be an easier way. go to the
deductions and credits tab
scroll down to the link for energy-efficient vehicles
check yes to bought a plug-in
the next screen check the box for type
then next screen check yes to transferred the credit to the dealer and the amount
continue through the following screens providing any needed info
finally you'll come to a screen where you enter vehicle info including its VIN
you're done. based on your agi for 2023 and 2024 any disallowed credit will go on schedule 2
I did this in step mode in desktop. since I don't use online I hope this works. for those that use this version.
this is from 8936 instructions
Transfer of new clean vehicle credit. For vehicles
placed in service after 2023, you may be able to transfer
the credit amount to the dealer at the time of sale and
receive an immediate financial benefit in place of a tax
credit claimed on your tax return. If you elect to transfer
the credit, you must file Form 8936 and Schedule A (Form
8936) with your return for the tax year in which the vehicle
was placed in service. For details, go to IRS.gov/
CleanVehicles.
I am the one who mentioned HR Block. While it handles this situation nicely, I should mention their solution is missing the Alternative Fuel Vehicle Refueling Property Credit. I installed my EVSE last year as well, so this was a deal breaker. HR Block customer service was a lot less competent than the Turbo Tax customer service, so I guess I'll wait for an automated solution here.
We are aware that some of our customers are having an issue with the EV credit payback reporting when the credit was transferred to the dealer.
Please click here to sign up to receive an email notification when this issue has been resolved.
The desktop version is also incorrectly handling the income limitations for the EV credit. Is that being worked on too? The guideline states that for married filing jointly, I qualify if my income is less than 150k in 2024 or 2023. Turbotax is looking at it the other way - that I'm disqualified if my income is >150k in either year.
Please double check that you entered your income that is less than $150,000 for 2023. Is TurboTax giving you the specific error telling you that you are income disqualified? When I enter an income of $145,000 for 2023 with an income of over $400,000 for 2024, TurboTax is still giving me the credit. Look at form 8936 to be sure your numbers are correct.
If you are still not getting the credit, you can delete your form 8936 and re-enter all of the information. If you are using the online version click here for instruction. In you are using the desktop version click here. After you delete the form if you are using the online version, you can clear your cache and cookies, then re-enter the information for the EV Credit.
Which version of TurboTax are you using?