Schedule A (Form 8936) did not exist for the 2020 tax year. Schedule A was introduced later under the Inflation Reduction Act for clean vehicle credits claimed in 2023 and after. For 2020, taxpayers used only Form 8936 itself to claim the Qualified Plug-in Electric Drive Motor Vehicle Credit. This guide covers the 2020 Form 8936.

What Form 8936 Is For

Form 8936 is the IRS form used to claim the federal tax credit for purchasing a qualified plug-in electric drive motor vehicle or a qualified two-wheeled plug-in electric vehicle during the 2020 tax year. This non-refundable credit helped reduce your tax liability when you bought an eligible electric or plug-in hybrid vehicle and placed it into service in 2020.

The credit amount varied by vehicle, ranging from $2,500 to $7,500 for four-wheeled vehicles, depending on the vehicle's battery capacity. For two-wheeled plug-in electric vehicles, the credit could be up to $2,500. The credit was split into two parts on the form: a business/investment use portion (treated as a general business credit) and a personal use portion (treated as a personal tax credit).

To qualify, you must have been the original owner of a new vehicle that was manufactured primarily for use on public streets and roads, had a battery capacity of at least 4 kilowatt hours (or 2.5 kWh for two-wheeled vehicles), and was capable of being recharged from an external electricity source. The vehicle had to weigh less than 14,000 pounds. If you leased the vehicle rather than purchased it, only the lessor (not you as the lessee) could claim the credit. IRS.gov

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

You should have filed Form 8936 with your original 2020 tax return if you placed a qualified electric vehicle in service during 2020. However, if you forgot to claim the credit or made errors on your original return, you can still claim it by filing an amended return using Form 1040-X.

For claiming a refund on an amended return, you generally have three years from the date you filed your original 2020 return or two years from the date you paid the tax, whichever is later. If you filed your 2020 return early (before the April 15, 2021 deadline), the three-year period counts from the April deadline. This means the deadline to amend your 2020 return to claim the electric vehicle credit would have been April 15, 2024 (three years after the April 15, 2021 filing deadline). IRS.gov

To file an amended return for this credit, you would complete Form 1040-X and attach the completed Form 8936, along with any supporting documentation such as the manufacturer's certification letter showing your vehicle qualifies for the credit and the credit amount.

Key Rules or Details for 2020

Manufacturer Phase-Out

The most critical rule for 2020 was the manufacturer phase-out provision. Once a manufacturer sold 200,000 qualifying vehicles in the United States after December 31, 2009, the credit began phasing out for that manufacturer's vehicles. The phase-out reduced the credit to 50% for two quarters, then 25% for two additional quarters, then eliminated it entirely.

For 2020, this significantly affected three major manufacturers. Tesla vehicles purchased after December 31, 2019 were no longer eligible for any credit. General Motors vehicles (including Chevrolet Bolt) purchased after March 31, 2020 received zero credit; those purchased between October 1, 2019 and March 31, 2020 received only 25% of the full credit ($1,875 instead of $7,500). Toyota vehicles were eligible for the full credit amount throughout 2020 but would begin phasing out in late 2022. IRS.gov

Certification Requirement

You could generally rely on the manufacturer's certification to the IRS that your specific make, model, and model year qualified for the credit. The IRS maintained a list of qualified vehicles and their credit amounts on its website. You needed to verify your vehicle was on this list with the correct credit amount. IRS.gov

Original Use Requirement

The original use of the vehicle must have begun with you. This meant you had to purchase a new vehicle, not a used one. The vehicle also had to be acquired for your own use or to lease to others, not for resale.

Primary Use in the United States

You had to use the vehicle primarily in the United States to qualify for the credit.

Step-by-Step (High Level)

Step 1: Verify Your Vehicle Qualifies.

Check the IRS list of manufacturers and models eligible for the credit for 2020. Confirm your vehicle's year, make, and model is listed, and note the specific credit amount. Obtain a copy of the manufacturer's certification letter if possible.

Step 2: Gather Required Information.

Collect your vehicle identification number (VIN), the date you placed the vehicle in service (typically your purchase or delivery date), and the applicable credit amount from the IRS list.

Step 3: Complete Part I (Tentative Credit).

Enter the year, make, and model of your vehicle on line 1. Enter the VIN on line 2 and the date placed in service on line 3. On line 4a, enter the credit amount from the IRS list (or the vehicle cost for two-wheeled vehicles). On line 4b, enter the phase-out percentage—100% for most vehicles, but lower percentages for Tesla and GM vehicles depending on your purchase date. Calculate line 4c by multiplying lines 4a and 4b.

Step 4: Determine Business vs. Personal Use.

If you used the vehicle 100% for personal purposes, skip Part II and go directly to Part III. If you used it for any business or investment purposes, continue to Part II.

Step 5: Complete Part II (Business/Investment Credit).

If applicable, enter your business use percentage on line 5. Complete the calculations through line 14. This portion flows to Form 3800 (General Business Credit).

Step 6: Complete Part III (Personal Use Credit).

Calculate your personal use portion of the credit through line 18, then determine your tax liability limit on lines 20-22. Enter the allowable personal credit on line 23. This amount transfers to Schedule 3 (Form 1040), line 6.

Step 7: Attach to Your Tax Return.

Include the completed Form 8936 when you file your Form 1040. The business portion (if any) flows through Form 3800, while the personal portion appears on Schedule 3.

Common Mistakes and How to Avoid Them

Mistake #1: Claiming Credit for a Phase-Out Manufacturer.

Many taxpayers purchased Tesla or GM vehicles in 2020 and mistakenly claimed the full $7,500 credit, not realizing these manufacturers had reached the 200,000-vehicle threshold. Double-check the manufacturer phase-out status and the correct phase-out percentage for your purchase date. For Tesla, vehicles purchased after 12/31/2019 received zero credit. For GM, vehicles purchased after 3/31/2020 received zero credit.

Mistake #2: Using the Wrong Credit Amount.

Not all electric vehicles qualified for the full $7,500 credit. Many plug-in hybrids qualified for smaller amounts based on battery capacity (ranging from around $4,000 to $7,500). Always use the specific credit amount listed by the IRS for your exact vehicle model year rather than assuming $7,500.

Mistake #3: Leasing vs. Purchasing Confusion.

If you leased your electric vehicle, you cannot claim this credit—only the leasing company (lessor) can. This confused many taxpayers who received manufacturer incentives at lease signing and mistakenly thought they could also claim the federal tax credit.

Mistake #4: Incorrect VIN Entry.

The vehicle identification number must be entered exactly as it appears on your vehicle registration. Any errors can cause IRS processing delays or rejections, especially if filing electronically.

Mistake #5: Forgetting the Tax Liability Limit.

The personal portion of the credit is non-refundable, meaning it can only reduce your tax liability to zero, not generate a refund. If your tax liability (after other credits) is less than your calculated credit amount, you'll lose the excess—it cannot be carried forward to future years. Calculate your tax liability carefully on lines 20-22 before expecting a specific refund amount.

Mistake #6: Missing the Amended Return Deadline.

Many taxpayers discovered they forgot to claim this valuable credit only after filing. Remember, you have only three years from your filing deadline to file an amended return to claim the credit for 2020.

What Happens After You File

If You Filed the Credit with Your Original Return: The IRS will review your Form 8936 as part of processing your tax return. If everything is in order, your credit will reduce your tax liability or increase your refund as calculated. Processing typically takes 21 days for electronically filed returns or six to eight weeks for paper returns.

The IRS may request additional documentation if there are questions about your vehicle's eligibility. This might include a request for the manufacturer's certification letter, proof of purchase showing the VIN and purchase date, or documentation of your vehicle's battery capacity. Respond promptly to any IRS correspondence requesting additional information.

If You're Filing an Amended Return: Form 1040-X processing takes considerably longer than original returns—typically 8 to 12 weeks, and sometimes up to 16 weeks or more during busy periods. You can check your amended return status using the IRS "Where's My Amended Return?" tool on IRS.gov, but only after three weeks from when you filed. IRS.gov

Audit Potential: While most Form 8936 claims are processed without issue, the IRS may select your return for examination if there are discrepancies with manufacturer records or if your vehicle doesn't appear on the IRS's qualified vehicle list. Keep all supporting documentation, including your purchase agreement, manufacturer's certification, and proof of the vehicle's specifications, for at least three years after filing.

Carryforward Rules: For the business portion of the credit (Part II), any unused credit due to business tax liability limits can be carried back one year and forward up to 20 years as part of the general business credit. However, the personal use portion (Part III) cannot be carried forward or back—if you can't use it in 2020 due to insufficient tax liability, it's lost.

FAQs

1. Can I claim the credit if I bought a used electric vehicle in 2020?

No. For the 2020 tax year, the credit was only available for new vehicles where you were the original owner. The original use of the vehicle must have begun with you. A separate used clean vehicle credit was introduced later under the Inflation Reduction Act but wasn't available for 2020 purchases.

2. What if I bought my vehicle in December 2020 but didn't receive delivery until January 2021?

You claim the credit in the year you placed the vehicle in service, which is generally when you took possession and began using it. If you received delivery in January 2021, you would claim the credit on your 2021 tax return, not your 2020 return, even if you signed the purchase contract in 2020. Under tax law, a vehicle is acquired when title passes under state law, typically at delivery.

3. My tax software or the IRS rejected my Form 8936. What should I do?

Electronic rejections often occur due to VIN entry errors, mismatches between the VIN and taxpayer ID, incorrect credit amounts that don't match IRS records, or inconsistent purchase dates. Double-check that your VIN is entered exactly as it appears on your registration (17 characters, no spaces). Verify your credit amount matches the IRS's published list for your exact vehicle model year. If problems persist, you may need to file a paper return instead.

4. I used my electric vehicle 60% for business and 40% for personal use. How do I calculate the split?

Complete both Part II and Part III of Form 8936. In Part II, line 5, enter 60% as your business use percentage. In Part III, you'll calculate the personal portion based on the remaining 40%. The business portion flows to Form 3800 and can be carried forward if you can't use it all in 2020. The personal portion goes to Schedule 3 but cannot be carried forward—you either use it in 2020 or lose it.

5. What documentation should I keep to support my credit claim?

Keep your vehicle purchase agreement showing the purchase price, VIN, and delivery date; the manufacturer's certification letter to the IRS acknowledging your vehicle qualifies for the credit; your vehicle registration; proof of the battery capacity if not included in the certification; and records of business vs. personal use if claiming a business portion. Maintain these documents for at least three years after filing your return.

6. Can I claim this credit along with state or local electric vehicle incentives?

Yes. The federal Form 8936 credit is separate from state and local incentives. Many states offered their own tax credits, rebates, or other incentives for electric vehicle purchases in 2020. Claiming state incentives does not reduce your federal credit amount, and vice versa. However, check your state's specific rules, as some states treat federal credits differently for state tax purposes.

7. I received a dealer incentive or manufacturer rebate when I purchased my vehicle. Does this affect my credit?

Manufacturer or dealer rebates and incentives do not reduce your federal tax credit amount. The credit amount is determined solely by the vehicle's battery capacity and manufacturer phase-out status, not by the price you paid or any incentives you received. However, if you leased the vehicle and the dealer provided you with a "lease incentive," this may mean the leasing company (who legally owns the vehicle) claimed the federal credit and passed part of it to you as a price reduction—in that case, you personally cannot also claim the credit on Form 8936.

Sources

All information derived from IRS Form 8936 (Rev. January 2021), Instructions for Form 8936 (Rev. January 2021), and official IRS guidance available at IRS.gov/Form8936.