How the Electric Car Tax Credit Works and How to Take Advantage of It
If you have recently purchased an electric car or are planning to buy one in the next few months, you might be fully aware of all the benefits this type of car offers for both gas mileage and the environment. In addition to these important benefits, your electric car purchase may also help you when it comes to your federal tax return this year. The electric car tax credit is generally valued at up to $7500, depending on your vehicle’s battery size. As you might expect, this has the potential to really make a difference in your annual tax return and save you a considerable sum of money.
Important Factors When Evaluating the Electric Car Tax Credit
- You can only claim the electric car tax credit if you purchase the car. If you lease it instead, the leasing company actually receives the tax credit due to the fact that they actually own the vehicle. You may still receive savings from the leasing company, but you will not be able to include this credit on your tax return.
- Your vehicle must be used primarily in the US for you to be eligible for the tax credit.
- To qualify for the tax credit, you must purchase a vehicle from a qualified manufacturer, including Audi, BMW, Cadillac, Chevrolet, Fiat, Ford, Hyundai, Kia, Mercedes, Mitsubishi, Nissan, Porsche, Tesla, Toyota, Volkswagen and Volvo.
- The federal tax is not applicable if you plan to resell the vehicle.
- These tax credits will eventually run out so purchasing sooner rather than later may benefit you. The expiration date is different for each car manufacturer, and usually occurs when 200,000 of a particular model have been sold.
- Many states offer additional tax benefits as well. You can check with your state for specifics.
It’s also important to keep in mind that you will only benefit from this tax credit if your tax bill at the end of the year exceeds the amount you qualify for. For example, if you owe $5,000 on your taxes, but qualify for the full $7,500 tax credit from your electric vehicle, the federal government will not issue you a check for the remaining $2,500.
Full Service Tax Support
If you still have questions about how you can use the electric car tax credit on your personal tax returns this year, contact the team at Success Tax Relief. Our team has been helping taxpayers all over the country with annual tax returns for more than three decades. We can make sure that you maximize this important tax credit on your return and can help with other tax issues as well including general tax preparation, audits and even negotiating terms of payment with the IRS.
There is no reason why completing your taxes each year has to be so stressful. Success Tax Relief can take this stress off of your shoulders and give you confidence that your return is correct, that you are maximizing all possible tax credits and deductions, and that you have a plan in place for payment should this be necessary. Call the team at Success Tax Relief at 1-877-825-1179 to learn more, or contact us online.