Solved

Form 8936 does not calculate income limit correctly

Forum|Forum|2 years ago
February 21, 2024
1 reply
0 views

I purchased an EV in 2023.

I filed my taxes in 2022 as Head of Household; my income was under the electric vehicle credit threshold.

My 2023 income is above the threshold.

TT will not allow me to take the electric vehicle credit as my 2023 income is too high. However, the IRS site states that one can use the AGI for the year in which the car was purchased OR the prior year; whichever is lower.

TurboTax Deluxe Online

Best answer by AnnetteB6

Be sure that you have entered all of your income for your 2023 tax return. Then, as you go through the credit section to enter the details for the Clean Vehicle Tax Credit, TurboTax will determine if your 2023 modified AGI meets the qualifications.

If it does not, then there will be an additional screen asking you to enter your 2022 tax return information to qualify based on your prior year information. If you do not get that additional request for information, your current year return is under the maximum limit.

Be aware that after researching this further using the IRS Instructions for Form 8936, there does not seem to be any guidance or provision in the instruction that allows for you to apply the limitation based on the previous year's filing status modified AGI limit. It only allows you to use the previous year's modified AGI, but it must be under your current year's filing status limit.

Take a look at the 2023 version of the IRS Form 8936 using the link below. The top section labeled Part I is where it compares your current year modified AGI to your previous year modified AGI. The lowest of these is reported on line 5.

Then, there is a note in the beginning of Part II, Part III, and Part IV giving the filing status limitation on the amount shown on line 5. Applying the limitation to the previous year's filing status is not an option, the form is looking at your current filing status.

2023 Form 8936

A

AnnetteB6Answer

Be sure that you have entered all of your income for your 2023 tax return. Then, as you go through the credit section to enter the details for the Clean Vehicle Tax Credit, TurboTax will determine if your 2023 modified AGI meets the qualifications.

If it does not, then there will be an additional screen asking you to enter your 2022 tax return information to qualify based on your prior year information. If you do not get that additional request for information, your current year return is under the maximum limit.

Be aware that after researching this further using the IRS Instructions for Form 8936, there does not seem to be any guidance or provision in the instruction that allows for you to apply the limitation based on the previous year's filing status modified AGI limit. It only allows you to use the previous year's modified AGI, but it must be under your current year's filing status limit.

Take a look at the 2023 version of the IRS Form 8936 using the link below. The top section labeled Part I is where it compares your current year modified AGI to your previous year modified AGI. The lowest of these is reported on line 5.

Then, there is a note in the beginning of Part II, Part III, and Part IV giving the filing status limitation on the amount shown on line 5. Applying the limitation to the previous year's filing status is not an option, the form is looking at your current filing status.

2023 Form 8936

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

A

alishkabAuthor

Thank you for the detailed response. It seems to contradict the guidance provided on the IRS site that I quote below:

In addition, your modified adjusted gross income (AGI) may not exceed:

$300,000 for married couples filing jointly
$225,000 for heads of households
$150,000 for all other filers

You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit.

The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years.