What Form 8936 Is For

Form 8936 is the IRS tax form you use to claim a federal tax credit when you purchase a qualifying plug-in electric vehicle (EV). Think of it as the government's way of rewarding you for going green—by reducing the amount of tax you owe. For the 2019 tax year, this credit could be worth up to $7,500 for four-wheeled vehicles (like electric cars and SUVs) or up to $2,500 for two-wheeled electric motorcycles, depending on the vehicle's battery capacity and the manufacturer.

The credit comes in two flavors depending on how you use your vehicle. If you bought an EV for personal use—like commuting to work or running errands—the credit is treated as a personal nonrefundable credit, which means it can reduce your tax bill to zero but won't result in a refund. If you use the vehicle for business or investment purposes, it becomes a general business credit that offers more flexibility in how and when you can use it.

It's important to understand that this isn't a rebate or cash-back program. You don't receive a check for buying an electric vehicle. Instead, the credit reduces what you owe the IRS when you file your tax return. If your tax liability is lower than the credit amount for a personal vehicle, you lose the difference—it doesn't roll over to future years.

When You’d Use Form 8936 (Late/Amended Filing)

You must file Form 8936 with your tax return for the year you actually placed the vehicle in service—typically the year you took delivery and started driving it. If you bought your EV in December 2019 but didn't receive it until January 2020, you'd claim the credit on your 2020 return, not 2019.

What if you forgot to claim the credit when you originally filed? Don't panic. You can file an amended return using Form 1040-X to claim the credit you missed. The IRS generally allows you to amend returns for up to three years after the original filing deadline. For example, if you bought an EV in 2019 and filed your taxes by April 15, 2020, but forgot Form 8936, you typically have until April 15, 2023, to file an amended return and claim that credit.

Late filing is also straightforward: if you file your 2019 return late (whether or not you requested an extension), simply attach Form 8936 when you submit your return. The credit will be calculated as part of your overall tax liability for that year. Keep in mind that for personal-use vehicles, if the credit exceeds your tax liability, you won't recover the unused portion—another reason to file on time and maximize your benefit.

Key Rules or Details for 2019

The 2019 tax year brought some significant changes to the electric vehicle credit landscape, particularly the dreaded phaseout affecting popular manufacturers. Here's what you need to know:

Phaseout Rules

Once a manufacturer sells 200,000 qualifying electric vehicles in the United States (counted from 2010 onward), the credit begins to phase out for that manufacturer's vehicles. The phaseout works in stages: the credit drops to 50% of the original amount for two quarters, then to 25% for two more quarters, and finally disappears completely.

For Tesla vehicles purchased in 2019, the phaseout meant:

• Vehicles purchased January 1 – June 30, 2019: 50% credit ($3,750 maximum)
• Vehicles purchased July 1 – December 31, 2019: 25% credit ($1,875 maximum)
• After December 31, 2019: No credit available

For General Motors vehicles (like the Chevrolet Bolt) purchased in 2019:

• Vehicles purchased January 1 – March 31, 2019: Full credit (up to $7,500)
• Vehicles purchased April 1 – September 30, 2019: 50% credit ($3,750 maximum)
• Vehicles purchased October 1 – December 31, 2019: 25% credit ($1,875 maximum)

Basic Eligibility Requirements

To qualify for any credit in 2019, your vehicle must meet these criteria:

• Be a new vehicle (original use begins with you)
• Have at least four wheels for the main credit, or two wheels if claiming the two-wheeled vehicle credit
• Be manufactured primarily for use on public roads
• Have a gross vehicle weight under 14,000 pounds
• Powered by a battery with at least 4 kilowatt-hours capacity (2.5 kWh for two-wheelers)
• Be used primarily in the United States
• Not be acquired for resale

One crucial rule: only owners can claim the credit, not lessees. If you lease an EV, your leasing company claims the credit, though they may pass the savings to you through lower lease payments.

Step-by-Step (High Level)

Filing Form 8936 doesn't have to be complicated. Here's how the process flows:

Step 1: Gather Your Documentation.

You'll need your vehicle's identification number (VIN), purchase date, purchase price, and the manufacturer's certification letter confirming the credit amount. Most dealers provide this certification at the time of sale, or you can find it on the IRS website's list of qualified vehicles.

Step 2: Complete Part I (Vehicle Information).

Enter your vehicle's year, make, model, and VIN. Then input the tentative credit amount from the manufacturer's certification on Line 4a. On Line 4b, apply the phaseout percentage if you purchased a Tesla or GM vehicle (as outlined above). For most other manufacturers in 2019, you'd enter 100%.

Step 3: Determine Business/Personal Use (Part II for business use, Part III for personal use).

Calculate what percentage of your driving is for business versus personal use. If it's 100% personal, you'll work through Part III. If you use it for business, even partially, you'll calculate the business portion in Part II. For mixed-use vehicles, you'll need to track and document your mileage throughout the year.

Step 4: Apply the Credit to Your Tax Liability.

For personal use, the credit can only reduce your taxes to zero—you can't get a refund of any excess. Business credits follow different rules and may be carried forward to future years if you can't use them immediately.

Step 5: Reduce Your Vehicle's Basis.

This is an important step many people miss. You must reduce the cost basis of your vehicle (what you paid) by the amount of the credit you claimed. This matters if you later sell the vehicle or use it for business depreciation purposes.

Step 6: Attach to Your Tax Return.

Include the completed Form 8936 when you file your Form 1040. Most tax software will walk you through this process automatically.

Common Mistakes and How to Avoid Them

Mistake #1: Incorrect or Missing VIN.

The IRS cross-references your VIN with manufacturer reports. If your VIN is wrong by even one character, your return will be rejected. Double-check your VIN against your vehicle registration, title, or insurance card. It should be exactly 17 characters.

Mistake #2: Ignoring the Phaseout.

Many taxpayers in 2019 claimed the full $7,500 credit for Tesla or GM vehicles purchased after the phaseout began. This triggers IRS scrutiny and potential audits. Always check the manufacturer's phaseout status and calculate the correct percentage for your purchase date.

Mistake #3: Claiming Credit on a Leased Vehicle.

This is one of the most common errors. If you lease rather than own your EV, you cannot claim Form 8936. The leasing company claims it instead. Review your purchase agreement carefully—is it a lease or a purchase contract?

Mistake #4: Forgetting to Reduce Basis.

When you claim the credit, you must reduce the vehicle's tax basis by the credit amount. This affects future depreciation deductions for business vehicles and can impact capital gains calculations if you sell. Most tax software doesn't automatically track this, so you need to document it yourself.

Mistake #5: Losing Credit Due to Insufficient Tax Liability.

If you owe $3,000 in taxes and claim a $7,500 personal credit, you lose the remaining $4,500—it doesn't carry forward. Before purchasing, estimate your expected tax liability for the year. If you'll have low taxes, consider timing your purchase strategically or buying the vehicle through a business entity where unused credits can be carried forward.

Mistake #6: Used Vehicles.

Form 8936 in 2019 was exclusively for new vehicles. There was no credit available for used electric vehicles purchased in 2019, regardless of their age or condition. (Note: This changed in later years, but not for 2019.)

What Happens After You File

Once you submit your return with Form 8936 attached, the IRS processes your credit along with your tax return. If everything is correct, your credit reduces your tax liability dollar-for-dollar, and you'll see the benefit in your refund (if you overpaid) or reduced amount owed.

The IRS cross-checks VINs against manufacturer databases to confirm eligibility. This verification process is typically automated, so you won't hear anything if it matches. If there's a problem—such as a VIN mismatch, an ineligible vehicle, or an incorrect credit amount—you'll receive a notice from the IRS, usually a CP notice letter, explaining the discrepancy. You'll have the opportunity to respond with documentation proving your eligibility.

Keep excellent records. The IRS recommends retaining all documentation related to your credit claim for at least three years after filing, including:

• Vehicle purchase agreement or sales contract
• Manufacturer's certification letter
• Vehicle registration showing the VIN
• Documentation of business use percentage (if applicable)
• Proof of when you placed the vehicle in service

If you claimed a business credit and couldn't use all of it in 2019 due to tax liability limits, the unused portion carries forward to future years. You'll track this on Form 3800 (General Business Credit) in subsequent years until fully utilized. Personal credits, however, are lost if they exceed your tax liability.

One important consideration: if you sell the vehicle within three years of placing it in service, or if it no longer qualifies (for example, you start using it primarily outside the United States), you may have to recapture part of the credit. This means paying back a portion of what you claimed, calculated based on how long you owned and used the vehicle properly.

FAQs

Q1: Can I claim the credit if I bought a used electric vehicle in 2019?

No. For tax year 2019, Form 8936 was exclusively for new electric vehicles where the original use began with you. Used EVs did not qualify for any federal tax credit in 2019, regardless of the vehicle's age or condition. The used EV credit came later with subsequent legislation.

Q2: What happens if the credit is more than my tax liability?

For personal-use vehicles, the credit is nonrefundable. If you owe $4,000 in federal taxes and claim a $7,500 credit, your tax bill goes to zero, but you don't get the remaining $3,500 back—it's simply lost. This is different from business credits, which can carry forward to future tax years. Consider this when planning your EV purchase.

Q3: I purchased my EV in December 2019 but took delivery in January 2020. Which year do I claim the credit?

You claim the credit in the tax year when you placed the vehicle in service, which is generally when you took delivery and started using it. In your example, that would be 2020, not 2019. The purchase date matters for determining the phaseout percentage, but you file the form with the year you received the vehicle.

Q4: Can I claim the credit if I use my EV partly for business and partly for personal use?

Yes, but it gets more complex. You'll need to calculate the percentage of business use versus personal use (typically based on mileage) and split the credit accordingly. The business portion goes on Schedule C (or your business return) as part of the general business credit, while the personal portion goes on your Form 1040. You must maintain careful mileage logs to substantiate your business use percentage.

Q5: My dealer said they "applied the credit at purchase." Do I still need to file Form 8936?

For vehicles purchased in 2019, dealers could not directly apply the credit to your purchase—that option came later with the Inflation Reduction Act for 2024 and beyond. If a dealer offered you a discount or incentive, that was likely their own promotion or possibly state/local incentives, not the federal tax credit. You still need to file Form 8936 on your personal tax return to claim the federal credit.

Q6: I bought a Tesla in June 2019. Which credit amount do I use?

Tesla entered its phaseout period with 50% credit available from January 1 through June 30, 2019. Your June purchase qualifies for 50% of the full credit—so if your vehicle would have qualified for $7,500 at full credit, you can claim $3,750. Be sure to enter "50%" on Line 4b of Form 8936.

Q7: What if I discover I made an error after filing?

File Form 1040-X (Amended U.S. Individual Income Tax Return) along with a corrected Form 8936. You generally have three years from the original filing deadline to amend your return. Include an explanation of what you're correcting and why. The IRS will process your amendment and adjust your refund or balance due accordingly.

Additional Resources

For the most current information, forms, and manufacturer certification letters, visit the official IRS Form 8936 page at IRS.gov/Form8936. You can also access the 2019 Form 8936 instructions directly at IRS.gov/pub/irs-prior/i8936--2019.pdf for detailed technical guidance.

This guide is for informational purposes and based on IRS publications and instructions for tax year 2019. Tax laws and regulations are subject to change. Always consult with a qualified tax professional for advice specific to your situation.