How do I claim EV Tax Credit for a qualified EV that was placed into service in 2023, but I have a written binding contract prior to August 16, 2022?

[dsikora]

The IRS Published new guidance for this scenario on 3/31/2023 suggesting I would qualify, but in Turbo Tax if I enter the Date Acquired and Date Placed In Service to be in 2023, it does not let me file because it states:
"The Date Placed in Service must be in 2022 and no earlier than the Date Acquired. You can remove this vehicle if it was not placed in service in 2022."

The updated IRS Guidance is at: https://www.irs.gov/pub/taxpros/fs-2023-08.pdf (published 3/31/2023)

Q8: If I purchased or entered into a written binding contract to purchase my new clean vehicle after December 31, 2021, and before August 16, 2022, and placed it in service after December 31, 2022, what requirements apply and what tax year’s return can I claim the new clean vehicle credit on (added March 31, 2023)?

A8:  If you purchased or entered into a written binding contract to purchase a new clean vehicle after December 31, 2021, and before August 16, 2022, but took possession on or after August 16, 2022, you may claim the credit based on the requirements for the credit that applied on August 15, 2022, the day before the IRA was enacted.  To do so, you are required to claim the credit on a tax return for tax year 2022.  Depending on the date the vehicle is placed in service, you may claim the credit on an original, superseding, or amended return for tax year 2022.

Taxpayers may not claim the credit before they take possession of the vehicle. While taxpayers should file when they are ready, they should avoid filing prematurely. If you have not received the vehicle before your original tax filing deadline and you have the option, consider applying for an automatic extension of time to file your return. 

If you have not yet filed your tax return for tax year 2022 at the time you take possession of your new clean vehicle, you may claim the credit on your original 2022 tax return.  If you have already filed your tax return for tax year 2022 at the time you take possession of the new clean vehicle, you may file an amended tax return for tax year 2022 and claim the credit.  Generally, taxpayers must file an amended return within 3 years after the date the original return was filed or within two years after the date they paid the tax, whichever is later. 

[ShirlynW]

According to the instructions given by the IRS, a taxpayer a may not claim the credit before they take possession of the vehicle. If a taxpayer does not take physical of a qualified vehicle by December 31, 2022, the EV tax credit cannot be taken until tax year 2023.

[dsikora]

According to IRS guidance (https://www.irs.gov/pub/taxpros/fs-2023-08.pdf), this question directly applies to my scenario because:

a) I have a binding contract before August 16, 2022

b) I had my EV placed into service in January 2023.

Q8: If I purchased or entered into a written binding contract to purchase my new clean vehicle after December 31, 2021, and before
August 16, 2022, and placed it in service after December 31, 2022, what requirements apply and what tax year’s return can I claim the
new clean vehicle credit on (added March 31, 2023)?

If you keep reading, the text suggests that because I received my vehicle in 2023, I must claim it for tax year 2022.

If you have not yet filed your tax return for tax year 2022 at the time you take possession of your new clean vehicle, you may claim the credit on your original 2022 tax return. If you have already filed your tax return for tax year 2022 at the time you take possession of the new clean vehicle, you may file an amended tax return for tax year 2022 and claim the credit. Generally, taxpayers must file an amended return within 3 years after the date the original return was filed or within two years after the date they paid the tax, whichever is later.

This section I highlighted above is what suggests it's applicable to tax year 2022. 

Please keep in mind, this is relatively new guidance published on 3/31/2023. And I am posting here because the TurboTax website doesn't let me apply for this credit.

[JohnB5677 · Accepted solution]

I agree that this is a twisted mess, but you will be able to take the pre August 16th credit.

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. 

Credits for New Electric Vehicles Purchased in 2022 or Before

[ggramire]

I have the same issue. I have already filed and seeking to submit an amended 2022 return to receive the $7,500 credit, however, Turbotax is not allowing me to do so. To reiterate, I signed the binding contract Aug 15, 2022 and took delivery in August 2023. IRS guidance published March 2023 suggest I can receive the full credit as part of an amended return (https://www.irs.gov/pub/taxpros/fs-2023-08.pdf). According to the Turbotax form, "The date placed in service must be in 2022 and no earlier than the date acquired..."

Will this be fixed by Turbotax?

[DoninGA]

@ggramire 

There is nothing to fix in TurboTax.  As stated on the IRS website you posted, you claim the EV credit in the tax year it was placed in service.  You placed the EV vehicle in service during tax year 2023 so the credit is entered on the 2023 tax return you file next year in 2024.

https://www.irs.gov/pub/taxpros/fs-2023-08.pdf

Topic A - 

Q5. If I order a new clean vehicle in one year and don’t receive it until a subsequent year, when do I claim the credit? (updated March 31, 2023)
A5. The new clean vehicle credit is claimed in the tax year that the vehicle is placed in service, meaning the tax year that includes the date the taxpayer takes delivery of the vehicle. See also Topic C FAQs 5 and 8.

[ggramire]

According to the IRS instructions, the placed in service date should be the date of the binding contract (8/15/2022). This is per the transition rule:

Line 3

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.

[DoninGA]

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@ggramire wrote:

According to the IRS instructions, the placed in service date should be the date of the binding contract (8/15/2022). This is per the transition rule:

Line 3

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.

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That IRS reference is specifically for vehicles placed in service during tax year 2022.  It has no bearing on a vehicle placed in service during tax year 2023.

[DoninGA]

@ggramire 

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

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, see Credit for New Clean Vehicles Purchased in 2023 and After.