Can I file separately when married to take advantage of the EV tax credit?

[Vanessa A]

Yes.  Even if you file a separate return, you can still claim the EV credit, but only one of you can claim the credit, you both cannot claim the same vehicle for the credit.   In order to claim the new credit, your AGI must be less than:

• $300,000 if Married Filing Joint
• $225,000 if Head of Household
• $150,000 if single or Married Filing Separate

To claim the Used EV credit, your AGI would need to be less than:

• $150,000 for Married Filing Jointly
• $112,500 for Head of Household
• $75,000 for all other filers

You can use your AGI from the year you buy the vehicle or the year before if your income would qualify in one year but not the other. 

The EV Credit is a nonrefundable credit. A nonrefundable credit is not able to be fully used when you have no tax liability or less liability than your credit.   Look at line 16 on your 1040, then also look at line 24. If the amount on line 16 is less than $7,500, then you would not be eligible for the full credit.  If you have other credits, that may also reduce the tax liability, this may also reduce the amount of the credit you receive.  This would be the most likely reason your credit is only $2,800 instead of $7,500. 

Then look at line 24.  If this line is $0, then your credit was limited by your tax liability.  

Also remember, not every vehicle is worth a $7,500 credit. 

If you buy an EV that is on this list for the credit of new vehicles and you qualify for the credit, you will get credit for it on your 2023 taxes filed in 2024.  In order to receive credit for the EV on your 2023 return, you would need to have bought it during 2023. 

Things to remember about this credit:

• It is worth UP to $7,500 depending on the vehicle you purchase.      The credit varies per vehicle
• It is a nonrefundable credit.  This means it will reduce your tax liability by up to $7,500 but will not result in a negative number or a tax refund of money you did not pay in or have withheld.
• The credit cannot be carried forward
• You can use your income for the year you take delivery or the prior year if your income in the previous year was below the threshold if it is above the threshold in the current year. 
• Vehicle Qualifications are as follows:
  • Vans, SUVS, and Pickup Trucks my have an MSRP of no more than $80,000
  • Other vehicles must have an MSRP of no more than $55,000
    • The MSRP does not include destination charges, options added by the deal (seal coating, extended warranty, etc.) taxes, fees, or manufacturer discounts or incentives. Basically, it does not matter if you strike a good deal on the vehicle if the Manufacturer says it is worth more than the limit, it does not qualify.
  • Final Assembly must be in North America
  • The amount of the credit may be affected by date placed in service
    • January 1, 2023-April 17, 2023 credit of $2,500-$7,500
    • April 18, 2023 credit amount is $3,750 to $7,500
  • Click here to enter your VIN to see if your vehicle qualifies and the amount it qualifies for the credit

There is also a credit for used EV's but your AGI must be half of what is listed above for your filing status.  Here is a link to more details on the credit for used EV's. This credit is also a nonrefundable credit with a maximum credit of $4,000 depending on the vehicle. As you answer the questions for the vehicle you purchased, if your vehicle qualifies, TurboTax will complete form 8936 with your return.