Federal EV Credit Twice?

[MachSimba]

I bought a new Ford Mustang Mach E in April from a car lot. 
Tomorrow I will sell it for a check. (It’s fully paid off) 

I will use that check to buy a new Mach E from another car lot. (I just want that bigger battery)

Can I claim two federal EV credits? 
so can I get $15000 refund on this upcoming tax return?

[Critter-3]

Yes you "can" since each new car comes with it's own credit and there is no max per year or per lifetime limitation however the credit is NOT refundable so if you cannot use them both on one tax return then you lose the excess.  Review your situation carefully to see if you may want to delay the purchase until 1/1 and maybe the sale until 12/31. 

[MachSimba]

I will be selling tomorrow. I will be buying another Mach E EV in the fall. 

[Opus 17]

It doesn’t matter when you sell the used car.

If you want to make sure you will be entitled to the full credit for buying both cars in 2021, you will need to make sure that your tax liability exceeds the amount of the credit. Your tax liability is line 22 form 1040.  Another way of saying it is, if you had $10,000 of withholding on your W-2, and received a $1000 refund, then your tax liability was $9000. If you had $10,000 of withholding on your W-2 and you owed $1000, then your tax liability was $11,000.

If you expect your tax liability to be less than $15,000, there are one or two things you could do to increase your tax liability for 2021. Then the credit would offset the extra tax.  For example, if you converted some IRA funds to a Roth IRA, that creates taxable income. If you offset the tax with the EV credit, then you essentially convert the IRA for free and then withdraw money in the future tax-free since it is a Roth.  You might also sell some in investments to realize your long-term capital gains, and then offset the gains with the EV credit. Just remember to wait at least 30 days before re-purchasing the same or similar investments.

[Scottinatl]

Your tax liability is that which you owe despite what was withheld. Correct? Or is what you’re saying is you have to have more tax withheld. So if your income is such you owe $15,000 in federal tax, then you can qualify for both rebates even if your tax withheld is more or less. Is your gross income or agi  that matters. Is this right?

[Critter-3]

Your tax liability is that which you owe despite what was withheld. Correct?   Correct.

Or is what you’re saying is you have to have more tax withheld.  Negative... withholding is immaterial.

So if your income is such you owe $15,000 in federal tax, then you can qualify for both rebates even if your tax withheld is more or less.   The amount withheld is immaterial to being able to use the credits.

Is your gross income or agi  that matters. Is this right?  Actually it is taxable income that matters since that is what the tax liability is based on and what the credit can reduce.

The tax return is basically a long math problem so look at the form 1040 lines 15 thru 22. 

[LP1968]

I want to confirm that the following statement in your post below stil hold today (after the 2024 related rule updates); that is: "each new car comes with it's own credit and there is no max per year or per lifetime limitation". 

Please correct or confirm. Thanks in advance! 

[DawnC]

Correct.   Electric Vehicle Credits are non-refundable, meaning they cannot reduce your tax liability past zero.  @LP1968 

[LP1968]

Thanks for your prompt response! Understood that EV tax credit is non refundable... 

My question however is trying to confirm the different point that indeed "no max per year or per lifetime limitation" of how many new EV tax credits one can take. So, since "each new car comes with it's own credit", as long as one has enough tax liability to offest the totak credit, one can take more than one per year... Correct? 

Thanks again. 

[Vanessa A]

Yes, for the new EV credit, you can claim more than one credit in a year as long as you have the tax liability.  You simply need to include a separate form 8936 for each NEW EV you are claiming the credit for.

  However, for the used EV credit, you can only claim the credit once every 3 years. 

[lisaG4]

We just got my husband an EV and I am now wanting one too. Can we claim the tax credit on both vehicles? I see the answer above as sellin one and buying one, but what about just buying two in the same tax year?

[HarpTrey]

Are you sure this is correct? I’m undergoing an audit right now for tax year 2022. My Wife and I claimed a total of four EV tax credits that year. We are married filing jointly. All four cars happen to be in my name because I did not know there was a limit. They’re now claiming there is a two car limit per individual. Had I known that I simply would’ve put two in my name and two in her name.

[dmertz]

There appears to be no per-individual federal limit on the number of qualifying vehicles (in 2022 or any other year).  Some states have limitations on the number of qualifying vehicles for state tax credits.  If the IRS is telling you that there is a limit of two per individual, it appears that they are wrong.

[HarpTrey]

I did find the following language buried in the code. Please see the attached image… however, I’m not sure if this two car limit rule was in place for tax year 2022.

[HarpTrey]

...although the more I read the section the more I think the two car per person limit is only referring to the new "point of sale" transfer election to send the $7500 directly to the dealer. I can find no language for tax year 2022 that limited the number of new car EV tax credits to two per individual (the same way there were no MSRP restrictions of $80k for the car to qualify during tax year 2022). Anyone? Thoughts??