Electric Vehicle Tax Credit

[John C3]

I am purchasing an electric vehicle in December. Due to my retirement income not exceeding my standard deduction, I will owe no tax. That makes the credit useless. Can I convert some of my IRA into a Roth IRA and use the tax credit to offset any potential tax due?

[KochuK · Accepted solution]

Hi John C3, thank you for attending the event and post a question.

Yes,  you are correct that you need to have tax liability in order to utilize the electric vehicle credit (form 8936). This is a nonrefundable credit, part of Form 1040, Schedule 3 Additional Credits and Payments, line 6f.

Converting  some of your Traditional IRA into a Roth IRA is a taxable event and you can use the tax credit to offset any potential tax due.

Attached is the Form 1040, Schedule 3, form 8936 draft forms for your reference.

https://www.irs.gov/pub/irs-dft/f1040--dft.pdf 

https://www.irs.gov/pub/irs-dft/f1040s3--dft.pdf 

https://www.irs.gov/pub/irs-pdf/f8936.pdf 

Hope this helps. Thank you.