Electric drive vehicle credit 8936 decreased/rejected by IRS

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tzzhc4

Well-known member
Joined
Jun 4, 2011
Messages
139
I know this has been discussed in some other threads but I figured a thread specifically for it might be good if others are having the same problem.

Is anyone else having a problem with the IRS decreasing/rejecting your 7500 rebate for the Leaf based on TMT (tentative minimum tax)? I do not owe AMT but had my 7500 rebate basically nulled out because of TMT. I am having a tough time getting a straight answer from the IRS and don't know a good tax professional in Texas who is familiar with EV credits. If anyone can recommend a tax profession familiar with EV credits I would appreciate it. Paying someone for a consult or whatever would be worth it if I can get the rebate for my LEAF.

I think I figured out where the confusion is. There are two credits with similar names. 6251 instructions refers to the "Qualified Electric Vehicle Credit" which is form 8834. 8936 "Qualified Plug-in Electric and Electric Vehicle Credit" is not supposed to be subject to AMT or TMT at least it does not specifically mention AMT/TMT the way 8834 does:

From instructions for 6251: You claim the qualified electric vehicle credit, the personal use part the alternative fuel vehicle refueling property credit.

8834 Qualified Plug-in Electric and Electric Vehicle Credit (2 and 3 wheeled cars and slow cars, like golf carts)
8936 Qualified Plug-in Electric Drive Motor Vehicle Credit (regular cars that are electric)

I also found this but I don't know if that refers to everything or only to for 8910 "Alternative Motor Vehicle Credit":

Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT (Section 1144): Starting in 2009, the new law allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.
 
I don't know about that, but I do know that the IRS is sitting on my tax return for this year. I've had private discussion with someone else in the same situation and who has contacted them - he's waiting on "an investigator" being assigned to his "case"! :shock:
 
mwalsh said:
I don't know about that, but I do know that the IRS is sitting on my tax return for this year. I've had private discussion with someone else in the same situation and who has contacted them - he's waiting on "an investigator" being assigned to his "case"! :shock:

I don't think it's quite that ominous. The IRS randomly selects some returns claiming certain large tax credits. They go to the "examination" -- not the "investigation" -- department to be looked at by an "examiner." The only problem I have with the process is that it is taking way too much time.
 
My CPA here in California filed my federal return electronically and the refund including tax credit was posted in my bank account in about two weeks. He filed on form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit. I hope that information is helpful to you.
 
RSH said:
My CPA here in California filed my federal return electronically and the refund including tax credit was posted in my bank account in about two weeks. He filed on form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit. I hope that information is helpful to you.

Same here...substituting TX for CA. Guess that's why I pay someone to do my taxes :mrgreen:
 
Warning to Leaf buyers in 2011: I Thought everything was fine about getting my full $7500 credit according to Turbotax which I very carefully checked. Yesterday, I just got a letter from the IRS denying $3300 of the $7500 credit. Turbotax did not catch this for some unknown reason. The reason from the IRS was, and I quote: "Some credits are limited to the difference between your tax before credits and tentative minimum tax from Form 6251". My income is not that high and I am still getting hammered by this little known problem. I have spent hours online researching this to little or no avail.

Does anyone know how to fight this?

Thanks in advance,
Gary Dressel
 
IMO, if you have a large credit or itemized return then hire someone to do it. I would never use turbo tax unless I had a very basic return. With all the time people are spending fixing these issues and filing they could have paid a professional to do it properly. Most of the people having these issues are doing their own taxes or using someone like H&R block heads. Just a thought that may be far less expensive in the end.
 
If this becomes widespread, we may want to figure out who in the sales chain is most affected by this. Nissan is selling a lot of LEAFs based on the notion that these credits make the car affordable. If word gets out that we can't rely on this (promise from the government :lol: ), it is going to hurt further EV acceptance. Nissan chooses where to sell the car based on who's got the tax credits, so this is not just some windfall.

My tax return was pretty close to simple, with the addition of claiming this particular credit. First surprise was that I didn't even have a 7500 dollar tax liability. Then the program didn't have form 8936, so I filled one out manually and had to mail it. I'm sure that will end up at the DOE (Department of Eyeballs). I certainly hope they approve it, but it seems to be dependent on "who ya get" that looks at it.

They seem to be telling us that we can't get the whole credit because we're too rich. Looks like "the 1%" is suddenly getting larger.
 
If you don't even have a $7,500 tax liability the issue is that you're not rich ENOUGH. Which, granted, is a little oxymoronic.

As for the earlier comments about Turbo Tax telling you you could get the credit and then having the IRS reject part of it - if that happens you need to raise the issue to Turbo Tax. They guarantee accurate calculations...
 
gmuzhik said:
Warning to Leaf buyers in 2011: I Thought everything was fine about getting my full $7500 credit according to Turbotax which I very carefully checked. Yesterday, I just got a letter from the IRS denying $3300 of the $7500 credit. Turbotax did not catch this for some unknown reason. The reason from the IRS was, and I quote: "Some credits are limited to the difference between your tax before credits and tentative minimum tax from Form 6251". My income is not that high and I am still getting hammered by this little known problem. I have spent hours online researching this to little or no avail.

Does anyone know how to fight this?

Thanks in advance,
Gary Dressel


Sorry to hear that, Gary...I filed in early March using TurboTax and received my refund (including the entire $7500) about 3 weeks later...It will be interesting to see what happens with other buyers (including me)...
 
smkettner said:
Turbo tax filled out some form for me and refund was had in about three weeks.

what EVDRIVER said.
If you are trying to get a $7500 credit, plus perhaps credit for the EVSE, it pays to hire someone.
I dont have a simple return because my wife runs several businesses and files a schedule c.
on top of the usual fee of $700, I paid $100 extra to my guy to solve this issue. He had to go back several times to the computer people.
But it went through.

maybe there will be some issue down the road.

In addition, for future buyers or those who bought in 2012, you will want to use your ira to roth transfer to be sure you have enough liability to get the credit. over transfer; you can always adjust back.

that is the only advice I can provide. I got both the ev and evse credits and have an agi in five figures.
 
So far I was not able to find anywhere that credit from 8936 is subject to TMT or AMT, however this is very clear for 8911 Alternative Fuel Vehicle Refueling Property Credit
17 Tentative minimum tax (see instructions):
 
EdmondLeaf: Yes, that is my point! There is no mention of the form 8936 limitation from TMT or AMT, yet the IRS hammered me saying it is limited. I will be calling them to challenge! I'll post the results of that.
 
According to my research (limited though it is) it appears that this only applies if you are married filing jointly and have household income over $150k. Any one else see something I missed?
 
Not sure where you are getting the $150K and married filing jointly condition, but in my case, I am single and have income in the mid to upper five digit range. I have never paid AMT and wouldn't have paid it this year as it shows up as $0 on the form 1040 line 45. The IRS still says my Leaf credit is substantially reduced as stated earlier by $3300. The way to check is to do form 6251 and compare line 31 or 54 with your total tax on form 1040, line 61. In my case, the IRS took the higher one on form 6251. There is nothing I can find that supports this. You can bet, I will be challenging them. I wish I knew of a good tax professional who knows how to dig deep for an answer.
 
GeekEV said:
If you don't even have a $7,500 tax liability the issue is that you're not rich ENOUGH.
I have never had a $7500 tax liability. I leased, so I got the entire $7500. Of course, I'll probably end up paying more, given the finance charges. I guess I will pay NMAC instead of the feds...
 
thankyouOB said:
smkettner said:
Turbo tax filled out some form for me and refund was had in about three weeks.

what EVDRIVER said.
If you are trying to get a $7500 credit, plus perhaps credit for the EVSE, it pays to hire someone.
I dont have a simple return because my wife runs several businesses and files a schedule c.
on top of the usual fee of $700, I paid $100 extra to my guy to solve this issue. He had to go back several times to the computer people.
But it went through.

maybe there will be some issue down the road.

In addition, for future buyers or those who bought in 2012, you will want to use your ira to roth transfer to be sure you have enough liability to get the credit. over transfer; you can always adjust back.

that is the only advice I can provide. I got both the ev and evse credits and have an agi in five figures.
I have schedule C & E. There was a reduction in the credit if I claimed the car as business deduction. So I skipped the Leaf used for business deduction in 2011. I will start my deductions in 2012, just standard mileage rates.
 
gmuzhik said:
The way to check is to do form 6251 and compare line 31 or 54 with your total tax on form 1040, line 61. In my case, the IRS took the higher one on form 6251. There is nothing I can find that supports this.
That restriction does, in effect, apply to form 8911, the EVSE credit. If your TMT is that high you will definitely not get anything for the EVSE credit, and you shouldn't even try. Did you perhaps submit 8911 along with your other tax forms? I am beginning to suspect that some person or computer program at the IRS is getting the rules for 8911 and 8936 confused. My nonprofessional advice is to resubmit without form 8911 if your TMT (form 6251 line 33) is anywhere within $8K of your regular tax before credits (form 1040 line 46).

Ray
 
It sounds like it's not so random. our refund status on the IRS web site has been "Your tax return has been received and is being processed" for many months. We filed in early February and it's getting kind of nerve wracking. It appears that a few things could be adding to the delay. Our tax person has called and found that they are "investigating" the claim and that the main red flag is the EV credit. Our accountant told us we are in IRS limbo land, where it takes many weeks, sometimes months to get shuffled around. From the talk she had with an IRS rep last week, we will likely have to come up with the invoice and prove we actually bought the car but won't even be given the chance till 30 days passes from the time the investigation started or something like that. I have never had such a large return as we have better planned withholdings in the past. In hind sight, our accountant suggests trying to avoid ever having a refund over $10,000, as it automatically flags your account.

for folks buying this year, I would consider claiming more exemptions as you go if you can to keep the actual refund from being large... at the very least, you won't be wringing your hands for months waiting for a big refund check.



oakwcj said:
mwalsh said:
I don't know about that, but I do know that the IRS is sitting on my tax return for this year. I've had private discussion with someone else in the same situation and who has contacted them - he's waiting on "an investigator" being assigned to his "case"! :shock:

I don't think it's quite that ominous. The IRS randomly selects some returns claiming certain large tax credits. They go to the "examination" -- not the "investigation" -- department to be looked at by an "examiner." The only problem I have with the process is that it is taking way too much time.
 
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