EV Tax Credit Form 8936
According to this IRS article FAQ FS-2025-05, if you enter a binding contract and make a payment before 9/30/2025 but place in service a qualifying vehicle AFTER 9/30/2025, you are eligible for this credit. Here is the link and the exact text:
3. What effect does “acquisition” of a vehicle have on a taxpayer’s ability to claim a credit under sections 25E, 30D, and 45W?
Acquiring a vehicle prior to the termination date is an initial step, but acquisition alone does not immediately entitle a taxpayer to a credit. Sections 25E(a), 30D(a), and 45W(a) require the vehicle be “placed in service” to claim the respective credit (see IRS.gov for additional requirements). If a taxpayer acquires a vehicle by having a written binding contract in place and a payment made on or before September 30, 2025, then the taxpayer will be entitled to claim the credit when they place the vehicle in service (namely, when they take possession of the vehicle), even if the vehicle is placed in service after September 30, 2025. Taxpayers should receive a time of sale report from the dealer at the time they take possession or within three days of taking possession of the vehicle.
Does FreeTaxUSA support this logic? How do you input the dates correctly so that someone in this situation accurately gets the tax credit applied?
Answers
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It is not whether FreeTaxUSA accepts the logic, it is what the IRS defined when the acquisition of the EV occurred. Acquisition is defined as "entering into a binding written contract and making a payment on the vehicle on or before Sept. 30, 2025."
You should enter the date when the you have acquired the EV, if this was on or before September 30, 2025, even if you take possession of the vehicle or place it into service after that date. You would meet the eligibility to take the credit. Please refer to the IRS definition of the date of acquisition here: https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after
The vehicle must be placed in service for you to claim the credit. If a vehicle is placed in service after Sept. 30, 2025, you must have acquired the vehicle on or before Sept. 30, 2025, to be eligible for the credit. You can demonstrate acquisition by entering into a binding written contract and making a payment on the vehicle on or before Sept. 30, 2025. A vehicle is placed in service when you take possession of the vehicle.
Do you have the time of sale report from the dealer? Do you have the information from the dealer that they have report the EV sale to the IRS so that you can claim the credit on your tax return? Do you have any document from the dealer to see if the purchase is on time and eligible for the credit? The above IRS link also noted:
When you take possession of the vehicle, a seller must give you information about your vehicle's qualifications. Sellers must also register online and report the same information to the IRS. If they don't, your vehicle won't be eligible for the credit.0
