A Comprehensive Guide to the 8936 Clean Vehicle Tax Credit for 2023

TLDRLearn everything you need to know about the 8936 clean vehicle tax credit for the 2023 tax year, including how to bifurcate the credit for personal and business use, the credit amounts, basis reduction, and more.

Key insights

💡The 8936 clean vehicle tax credit is for electric vehicles that qualify for the tax year 2023 and beyond.

📅The credit amount is generally $7,500, but it is a non-refundable credit that can only be used to offset federal income taxes.

💰Claiming the credit requires a basis reduction in the vehicle's cost basis, and the credit can only be used to offset federal income taxes, not other types of taxes like self-employment taxes.

🚗If the vehicle is used for both business and personal purposes, the credit must be bifurcated based on the business use percentage.

📝The credit is reported on Form 8936 and can be carried forward if not fully utilized in the current year.

Q&A

What types of vehicles qualify for the 8936 clean vehicle tax credit?

—The credit is for electric vehicles that are battery-powered.

How much is the credit amount for the 2023 tax year?

—The credit amount is generally $7,500.

Can the credit be used to offset self-employment taxes?

—No, the credit can only be used to offset federal income taxes.

What is basis reduction?

—Basis reduction refers to reducing the cost basis of the vehicle by the amount of the credit claimed.

What happens if the vehicle is used for both business and personal purposes?

—The credit must be bifurcated based on the business use percentage.

Timestamped Summary

00:01This video provides a comprehensive guide to the 8936 clean vehicle tax credit for the 2023 tax year.

00:31The 8936 clean vehicle tax credit is for electric vehicles that qualify for the tax year 2023 and beyond.

02:07The credit amount is generally $7,500, but it is a non-refundable credit that can only be used to offset federal income taxes.

02:47Claiming the credit requires a basis reduction in the vehicle's cost basis, and the credit can only be used to offset federal income taxes, not other types of taxes like self-employment taxes.

03:35If the vehicle is used for both business and personal purposes, the credit must be bifurcated based on the business use percentage.

04:22The credit is reported on Form 8936 and can be carried forward if not fully utilized in the current year.

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