How does TurboTax handle situation where I transferred clean EV credit to dealer when I did not qualify?

Forum|Forum|1 year ago
January 27, 2025
3 replies
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I did not qualify for the used EV tax credit that was transferred to the dealer. There was a mutual misunderstanding of the AGI requirements. When I enter the vehicle on TurboTax it just says I don't qualify. I know I owe the $4000 credit and need to see it reflected on TurboTax.

RobertB4444

Please clarify - where did you receive this credit from? In order to owe it back to the IRS they have to have sent you the money in the first place and it doesn't sound like they did. This sounds like something that you need to work out with the dealer.

@yazell-donald

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yazell-donaldAuthor

Thank you for replying.

New as of 2024 was the ability to transfer the clean vehicle tax credit directly to the dealer in lieu of receiving it yourself. When you do this, the dealer credits that tax credit at the point-of-sale, so in this case, they took $4,000 off the price of the car since I was transferring the tax credit to them.

Herein lies the issue - I did not qualify for the tax credit. So I transferred a $4,000 credit that I was not eligible for to the dealer. I know I am going to be on the hook for the $4,000 and based on research I've done, I can find no answer other than I'll owe it to the IRS. TurboTax doesn't handle this situation.

RobertB4444

I don't see why you think you would owe this to the IRS?

The dealer took the credit from you and reduced the price of the car for you. So instead of paying $150K you paid $146K. Then the dealer gave you forms to fill out transferring the credit to them.

Once you did that the dealer filed the forms with the IRS to receive the credit. When you file your return and are not eligible for the credit the IRS will send a notice to the dealer rejecting their request for that credit. NO MONEY WILL GO ANYWHERE.

The dealer then needs to contact you and let you know that the $4000 reduction in price that you got is no longer valid and they need you to give them $4000. That is up to the dealer to handle - not you and certainly not on your tax return.

If you agreed to this deal because of bad advice that you got from this dealer I would gather all of the documentation showing that they gave you bad advice and get ready for an argument.

Either way this is not an issue for your tax return.

@yazell-donald

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Subliminll

I'm in the same boat. I transferred the EV credit to the dealer but my AGI was $6,000 over the limit. I need to repay this but Turbotax doesn't have the option to do it. Would be nice if turbotax fixed:

SCHEDULE 2 (Form 1040), line 1b (Repayment of new clean vehicle credit(s) transferred to a registered dealer
Form 8936
Schedule A (Form 8936)

to recalculate the refund / tax owed amount.

Mikeredmond13

Expanding on this... I transferred my $4000 credit to the dealership but our joint income has increased during the year so we no longer qualify. My wife and I recently purchased a house and our first year of mortgage interest is over $32,000.

We made $190,000 and our Federal Income tax total is $25,482. Since we have $6,000+ of mortgage interest deductions to spare ($32,000 - $25,482 = $6,518), do I have to pay back the $4000 EV Tax to the IRS or can I still simply leverage the remainder of my mortgage interest amount for this now owed amount?

bk251

issue is 'diligently ' being worked:

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/what-do-i-do-if-i-transferred-a-clean-vehicle-tax-credit-to-the-dealer-and-did-not-qualify-for-it/00/3432217?relatedcontent=3430431

I did eventually find a solution, although it's a stupid one. I called support until I found a representative who upgraded me to TurboTax Deluxe Desktop for free. Unfortunately it still has the same issue as Deluxe Online BUT if you switch to forms mode you can open Form 1040 Schedule 2 and double click on Line 1b. That will open up Form 8936 and Form 8936 Schedule for you to fill out yourself.

In my mind this defeats the whole purpose of paying for TurboTax in the first place. If I wanted to fill out the forms myself, I would have just started with that. I'm not using TurboTax next year.

Subliminll

@abigailjeske Were you then able to file online or did you have to print everything and mail the forms in? I saw another user mention H&R block will do the calculation and file electronically, but I want to see if turbotax can get this fixed before i do that. I've been using turbotax for YEARS and really don't want to switch if I don't have to.