Are you interested in purchasing an electric vehicle but new ones are just too expensive?
Well, as of January 1, 2023, you can now get a tax credit of up to $4,000 on the purchase of a used electric vehicle from a dealer. That’s right, only purchases from a car dealer qualify so don’t buy your neighbor’s old Tesla if you want the tax credit.
Also, that isn’t the only requirement. There is actually a long list of prerequisites that must be met in order to qualify for the credit. To help you meet them all, I created a checklist you can use to claim the used electric vehicle tax credit of $4,000 or 30% of the purchase price of the vehicle, whichever is less.
Keep this checklist close by for frequent access. Print a hard copy using our share tab or whatever your preference is.
The boxes you need to check:
o Purchaser must be an individual who bought the vehicle for use and not for resale.
o Purchaser must not be the original owner (i.e., you can't sell the car to yourself to get the credit).
o Purchaser cannot be claimed as a dependent on another person’s tax return.
o Purchaser cannot have claimed another used clean vehicle credit in the 3 years before the purchase date.
o Purchaser's modified adjusted gross income (MAGI) may not exceed, $150,000 for Married Filing Jointly or Surviving Spouse, $112,500 for Head of Household, or $75,000 for all other filing statuses.
o Vehicle must have a sale price of $25,000 or less.
o Vehicle must have a model year at least 2 years earlier than the calendar year when you buy it. For example, a vehicle purchased in 2023 would need a model year of 2021 or older.
o Vehicle must not have already been transferred after August 16, 2022 to a qualified buyer.
o Vehicle must have a gross vehicle weight rating of less than 14,000 pounds.
o Vehicle must be an eligible Fuel Cell Vehicle (FCV) or plug-in electric vehicle (EV) with a battery capacity of least 7 kilowatt hours. Looking for a list of qualified vehicles? Here is a link to use for that: https://www.irs.gov/credits-deductions/manufacturers-and-models-of-qualified-used-clean-vehicles.
o Vehicle must be for use primarily in the United States.
o Vehicle must be purchased from a dealer. A "dealer" is defined as "a person licensed to sell motor vehicles" in the U.S. or associated territories.
o For EVs, the dealer must report the required information to you at the time of sale and to the IRS. Required information includes:
o Dealer's name and taxpayer ID number
o Buyer's name and taxpayer ID number
o Sale date and sale price
o Maximum credit allowable under IRC 25E
o Vehicle identification number (VIN), unless the vehicle is not assigned one
o Battery capacity
As you can see, they certainly did not make it easy to qualify for the new credit but I hope this list I provided will help you be successful. Feel free to give me a call at (562) 259-7777 if you have any questions.
We can also complete the correct form when preparing your tax return to claim the credit.
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