2023 EV Federal Tax Credit for Co-Owners

[rudysnsx]

Hello,

Question regarding $7500 federal tax credit for qualified EV from 1/1/2023 to March 2023 guidelines. I have verified the vehicle will qualify for the $7,500 federal tax credit, but I am not eligible due to income restrictions. I am adding a family member that I do not file with and who is not a dependent and I am not their dependent. They will be eligible for the rebate at their income. I have read other posts about being eligible with co-owners, but they have referenced a loan agreement stating ownership. I am not financing and will be paying cash. Can you please help with some guidance on how to purchase the vehicle without financing so my family member could qualify for the credit? Some scenarios could be:

-I pay the vehicle by cash and list myself and family member on bill of sale and title as joint owners. Both owners will drive the vehicle.

-I pay the vehicle by cash and list myself on bill of sale and title the vehicle in both names. Both owners will drive the vehicle.

Also, what documentation must be provided to the IRS for the 2023 tax year? Form 8936 is not updated for guidance after 12/31/2022.

Thank You!

[Affordabletaxes2021]

The EV credit will only pay your tax liability. It’s not a flat $7500 credit. If the other person doesn’t have $7500  tax liability you won’t receive the whole credit. Only enough to cover the tax liability the rest is lost. 

[rudysnsx]

Thank you. I understand it is a federal tax credit and the other person must have >/= $7,500 in federal tax liability for 2023 for the full benefit.  I am requesting guidance on the eligibility. Thank You.

[Vanessa A]

For vehicles purchased in 2023, click here for the list of eligible vehicles. If the other person is single, they would need to have an Adjusted Gross Income of less than $150,000 to be eligible for the credit.  However, if they have income for 2023 of more than $150,000, but less than that in 2022, they could use their income for 2022.

However, depending on your exact situation, assuming this is not your spouse, if you are buying the car and they are not, then they technically would not be eligible for the credit.  In order to claim the credit, they would actually need to buy the car not just be an authorized driver on the car or receive it as a gift.