IRS Form 8936

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IRS Form 8936

The form is an official document developed for US citizens, which one should complete when requiring credit for cars and motorcycles with electric motors.

The main purpose of the form is to provide information about credit for appropriate vehicles with electric motors. You should figure and report the particular credit sum you spent in the previous accounting year to purchase and exploit electric cars or motorcycles.

According to the US laws, you are required to fill in your personal data such as information about vehicles and yourself as their owner in Form 8936. It is obligatory to provide some personal details to make sure the one who files the form obeys the laws and reports the personal and general business credits fairly and transparently. The procedure allows the government to collect the required data and figure out the tax sum correctly.

When to Use the Form?

This form is crucial to file only if a person intends to provide information about their credit on a personal means of transportation used for the objectives directly connected with entrepreneurship or investment. In either of these cases, the credit amount counts as a general business one. In other cases, when a vehicle is used privately, the credit is considered to be a personal financial obligation.

Therefore, it is not obligatory to complete form 8936. It is acceptable to fill out the necessary information in the third part of the form (use line 1y). Mind that this rule applies to citizens who have got their credit from an S-corporation or a partnership (with no additional sources).

What Vehicles Should a Taxpayer Report?

Generally, there are two types of vehicles the loans on which must be reported. The common feature for both electric cars and motorcycles is that they should be brand new, meaning that the start of the exploitation has taken place in the accounting tax year. Other requirements may differ.

A four-wheel vehicle must:

  1. Weight no more than 14 thousand pounds;
  2. Be set in motion by an electric motor primarily. The battery can be charged using external electric sources and shall provide the power of at least four kilowatt-hours.

A two-wheel vehicle must:

  1. Weight no more than 14 thousand pounds;
  2. Be set in motion by an electric motor primarily. The user can change or charge the battery using external electric sources.
  3. Have an engine that consumes the power of at least 2,5 kilowatt-hours;
  4. Achieve a speed of at least 45 miles per hour.

Revised Filing Requirements

To get and report the credit, the taxpayer has to meet the following prerequisites:

  1. You have bought and started to exploit the car or motorcycle during the current tax year;
  2. You should own the vehicle. If you, as an owner, offer your car or motorcycle for rent, you still have the right to get the credit tax deduction;
  3. The reason for purchasing a personal means of transportation was to use it for entrepreneurship, personal purposes, or lease, but not for resale;
  4. An electric car or motorcycle is used on the territories within the US;
  5. A vehicle was produced for usage in towns, on public streets, and outside the cities;
  6. You are the first one to use the new electric means of transport.

Below, you will find relevant info about the latest changes concerning the form completion. Make sure you get acquainted with these valuable pieces of information.

Firstly, the taxpayer certainty and disaster tax relief act introduced for the 2020 tax year is now prolonged. In case you want to get credit for some electric autos and motorcycles that have been or will be purchased in 2021, you have the right to do that.

Secondly, unlike the previous years, there will be no changes made to the form this year, so you do not have to look for the updates every time you complete it. However, some improvements still may occur if the IRS decides so.

Other IRS Forms for Corporations

There is a big number of official documents developed for US citizens by the IRS. Make sure to learn other forms you might need to file with the Service.

How to Fill out Form 3800

The form contains three parts according to three types of credits. Not all taxpayers are obliged to fill out all sections of the documents. After the first part, pay attention to the line, which says that you must not continue filling out the form if you do not use the car for entrepreneurship or your credit sources exclude S-corporations and partnerships.

After the second section, it is stated that the third part is compiled for reporting the private use of an electric vehicle. Read the instructions carefully and follow them not to fill out the information that does not refer to your particular case.

Complete the First Part

You should write down the vehicle’s identification number in the second line. To find it, go through the related documents (such as proof of insurance or registration). Look for the number which contains 17 signs (both letters and numbers).

step 1.1 complete the first part filling out irs form 8936

The information that you fill out on the fourth line (section a) depends on the type of vehicle. If it is a two-wheeled one, simply write down its price as in the first line. If it is a four-wheel one, fill out the credit allowable for the year, as well as the model and make of the vehicle.

step 1.2 complete the first part filling out irs form 8936

In line 4b (phase-out percentage), you should write down 100% in all cases except for the vehicles produced by General Motors or Tesla. Pay attention to the fact that the credit is no longer provided for the transport from these companies, which were purchased after March 31, 2020, for General Motors and December 31, 2019, for Tesla.

Therefore, if you provide information on a General Motors car, enter 25% if it was bought during the period from September 30, 2019, to April 1, 2020. Write down 0% if you purchased a vehicle after March 31, 2020. If you are an owner of Tesla, fill out the line with 25% for vehicles bought during the period from June 30, 2019, to January 1, 2020. Enter 0% if you made a purchase after December 31, 2019.

step 1.3 complete the first part filling out irs form 8936

Move on to the Second Part (If Needed)

On the fifth line, write down the percentage of investment or entrepreneurship usage. 100% should be written if you use your car or a motorcycle exclusively for these purposes or if you sell them. If you use personal transport both for earning money and your private life you have to do some calculations.

Divide the car mileage number (only when the reason for using a car was entrepreneurship) by the overall mileage (how many miles a vehicle is driven in general). If the main cause for using a car has changed during the year, figure out the percentages for particular months. Then divide this sum by twelve.

step 2.1 move on to the second part (if needed) filling out irs form 8936

On the seventh line, write down a section 179 expense deduction that you have claimed for your personal electric two- or four-wheel transport (see form 4562, the first part).

step 2.2 move on to the second part (if needed) filling out irs form 8936

Fill out the credit source data in line 19. Remember that they should include S-corporations and partnerships. They report the sum on this line only, while others also have to write down a separate credit in the document’s parts above and on this line. Those who have not been figuring out credit on previous lines can write down the information in the third part of form 3800 (look for line 1y).

step 2.3 move on to the second part (if needed) filling out irs form 8936

Fill out the Third Part of the Form

On line 21, a taxpayer must write down the general amount of credits from forms 1040, 5695, and 8910;

step 3.1 fill out the third part of the form filling out irs form 8936

After completing all required lines in the form, pay attention to the fact that the personal part of the credit sum which has not been used is lost. In addition, a taxpayer cannot carry it back or forward it to the other tax years.

step 3.2 fill out the third part of the form filling out irs form 8936