In 2018, there was no separate "Schedule A" for Form 8936. The 2018 version was a standalone form titled "Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles)." Schedule A as a separate attachment was introduced in later years. This guide covers Form 8936 as used for the 2018 tax year.

What Form 8936 Is For

Form 8936 is the IRS tax form you use to claim a federal tax credit for purchasing a qualifying electric vehicle. Think of it as your ticket to getting money back from the government for choosing an environmentally friendly car. In 2018, this credit was worth up to $7,500 for qualifying four-wheeled plug-in electric vehicles and up to $2,500 for two-wheeled electric motorcycles or scooters.

The form calculates your credit based on the specific vehicle you purchased, how you use it (personal versus business), and whether the manufacturer has sold too many qualifying vehicles (which triggers a phaseout). The credit comes in two parts: a business/investment portion (if you use the vehicle for work) and a personal use portion (for everyday driving). These two portions are treated differently by the IRS – the business part goes through Form 3800 as a general business credit, while the personal part applies directly to reduce your income tax on Schedule 3 of Form 1040.

IRS Form 8936 for 2018

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

You file Form 8936 with your regular tax return for the year you actually started using the vehicle – not necessarily when you bought it. Here's when timing matters:

Standard Filing

If you purchased and started driving your qualifying electric vehicle anytime during 2018, you would file Form 8936 with your 2018 tax return (normally due April 15, 2019).

Late or Amended Situations

Maybe you forgot to claim the credit, or you didn't realize your vehicle qualified. You can still capture this money by filing an amended return using Form 1040-X. You generally have three years from the original filing deadline to amend. For a 2018 vehicle, that means you had until approximately April 15, 2022, to claim the credit. If that deadline has passed, unfortunately, the credit is lost.

Special Circumstance for Two-Wheeled Vehicles

If you bought a qualifying two-wheeled electric vehicle in 2017 but didn't start using it until 2018, you could still claim it on your 2018 return. The credit for two-wheeled vehicles expired after 2017, but the IRS allowed this grace period if the vehicle was placed in service in 2018.

2018 Form 8936 Instructions

Key Rules or Details for 2018

To qualify for the 2018 electric vehicle credit, your situation must check all these boxes:

Vehicle Requirements

• You must be the owner, not a lessee (only the leasing company gets the credit if you lease)
• The vehicle must be new – no used vehicle credit existed in 2018
• It needs at least 4 kilowatt hours of battery capacity (for four-wheeled vehicles) or 2.5 kilowatt hours (for two-wheeled vehicles)
• The vehicle must be manufactured primarily for public roads and capable of reaching certain speeds (45 mph or greater for two-wheeled vehicles)
• Gross vehicle weight must be less than 14,000 pounds
• Original use must begin with you – it can't be a demo vehicle someone else drove first
• You must use it primarily in the United States

Credit Amounts

• Four-wheeled vehicles: The credit varied from $2,500 to $7,500 depending on battery size, with most popular EVs qualifying for the full $7,500
• Two-wheeled vehicles: 10% of the cost, up to $2,500 maximum

The Manufacturer Phaseout (Crucial for 2018)

Once an automaker sold its 200,000th qualifying electric vehicle in the U.S., the credit began phasing out for that manufacturer's vehicles. According to IRS quarterly sales data, in 2018 no manufacturers had yet hit the phaseout threshold. Tesla came closest with cumulative sales reaching approximately 182,000 vehicles by the end of 2018, but remained under the 200,000 threshold during the tax year. General Motors also approached but did not exceed the limit in 2018. For all vehicles purchased and placed in service during 2018, manufacturers offered 100% of the full credit.

The phaseout works as follows: it begins in the second calendar quarter after the quarter in which the 200,000th vehicle was sold. Then it allows 50% of the full credit for 2 quarters, 25% of the full credit for 2 additional quarters, and no credit thereafter.

You must reduce your vehicle's tax basis (cost for depreciation purposes) by the credit amount you receive, unless you elect not to claim the credit.

IRS Manufacturers and Models List

IRS Quarterly Sales Data

Step-by-Step (High Level)

Part I: Calculate Your Tentative Credit

• Identify your vehicle: Write down the year, make, model, VIN (vehicle identification number), and the date you started using it
• Determine the credit amount: For most four-wheeled EVs, you'll enter the manufacturer-certified credit. The manufacturer or dealer should provide this information. You can verify the credit amount on the IRS's list of qualified vehicles
• Check the phaseout: In 2018, all vehicles qualified for 100% of the credit – enter "100%" on line 4b

Part II: Business/Investment Use Portion

This part only applies if you use the vehicle for business. If it's purely personal, skip to Part III.

• Calculate your business use percentage: If you use the vehicle 60% for business and 40% for personal driving, enter 60%. Determine the percentage by dividing the number of miles driven for business purposes by the total number of miles driven for all purposes
• Apply any Section 179 deductions you claimed for the vehicle on Form 4562
• Calculate the business credit: This flows to Form 3800

Part III: Personal Use Portion

• Calculate your personal use credit: This is the credit remaining after removing any business portion
• Check your tax liability limit: The personal credit can only reduce your tax to zero – it won't generate a refund. If your total tax (from Form 1040, line 11 in 2018) minus other credits is less than your vehicle credit, you lose the excess. There's no carryforward for unused personal credit.

Final Steps

• Business credit goes on Form 3800
• Personal credit goes on Schedule 3 (Form 1040), line 54, with "8936" written in the space provided

Common Mistakes and How to Avoid Them

Mistake #1: Claiming the credit when you lease

Only the vehicle owner can claim the credit. If you lease an electric vehicle, the leasing company owns it and claims the credit (though they may pass savings to you through lower lease payments).
Avoid it: Only complete Form 8936 if the vehicle title is in your name.

Mistake #2: Not having manufacturer certification

The IRS requires vehicles to be certified by the manufacturer. You can't just buy any electric vehicle and claim the credit.
Avoid it: Ask the dealer for a copy of the IRS certification acknowledgment letter before purchasing. Check the IRS website for the list of qualified vehicles and credit amounts at IRS.gov.

Mistake #3: Losing unused personal credit

The personal portion is "use it or lose it" – if your tax liability isn't high enough, the excess credit disappears.
Avoid it: Before purchasing, calculate your expected tax liability to see if you can use the full credit. Consider timing the purchase when you'll have higher income, or explore whether business use might help.

Mistake #4: Wrong vehicle identification number

A missing or incorrect VIN will cause processing delays and potential credit denial.
Avoid it: Triple-check the VIN from your vehicle registration or title – it should be exactly 17 characters.

Mistake #5: Not adjusting vehicle basis

For business vehicles, you must reduce your depreciation basis by the credit amount.
Avoid it: When completing Form 4562 (depreciation), remember to subtract the credit from the vehicle's cost basis.

Mistake #6: Claiming a used vehicle

The 2018 credit only applied to new vehicles.
Avoid it: If you bought a pre-owned electric car in 2018, you don't qualify for this credit (a used EV credit wasn't available until 2023).

Mistake #7: Incorrectly applying phaseout percentages

Some taxpayers mistakenly apply phaseout reductions when purchasing in 2018.
Avoid it: For 2018 tax year purchases, all manufacturers qualified for 100% of the credit. No phaseout applied during 2018. The Tesla phaseout didn't begin until January 1, 2019, and General Motors' phaseout started April 1, 2019.

What Happens After You File

Once you submit Form 8936 with your tax return, here's what to expect:

Immediate Effect

The credit reduces your tax bill dollar-for-dollar. If you owed $10,000 in taxes before the credit and claim a $7,500 EV credit (with sufficient tax liability), your bill drops to $2,500. If you were getting a refund, it increases by the credit amount (up to the limit of your tax liability for the personal portion).

IRS Processing

The IRS will review your form as part of standard return processing. This typically takes a few weeks for e-filed returns, longer for paper returns. The vehicle credit itself doesn't usually trigger special scrutiny unless something looks unusual.

Verification Possibility

The IRS may ask you to verify your claim by providing:

• The vehicle's VIN and manufacturer certification
• Purchase documents showing the date you acquired and placed the vehicle in service
• For business use, documentation supporting your business use percentage

Keep these documents for at least three years after filing.

Refund or Reduced Payment

If you have a refund coming, it will be direct deposited or mailed according to your election on Form 1040. If you owe taxes, the credit reduces what you must pay.

State Credits

Some states offered additional EV tax credits or rebates in 2018. These are separate from the federal Form 8936 credit and don't appear on this federal form. Check with your state tax authority for details.

Multi-Year Impact

If you claimed business use, the reduced basis affects your depreciation deductions for several years. Keep good records because this impacts future tax returns until the vehicle is fully depreciated or sold.

IRS About Form 8936

FAQs

Q1: Can I claim the credit if I bought the vehicle in December 2018 but didn't register it until January 2019?

The credit applies to the tax year when you "placed the vehicle in service" – when you actually started using it. If you bought it in December 2018 but first drove it in January 2019, you'd claim the credit on your 2019 return, not 2018. The purchase date matters less than the "in service" date.

Q2: What if my spouse and I file separately – who claims the credit?

If you're married filing separately and jointly own the vehicle, you can split the credit between you in any proportion you agree on. Each of you would file a Form 8936 showing your portion. If only one spouse's name is on the title, generally only that person can claim it.

Q3: I bought a plug-in hybrid – does it qualify?

Yes! Plug-in hybrid electric vehicles (PHEVs) qualified for the credit in 2018, though the credit amount depended on battery capacity. Different models received different credit amounts based on their battery size, ranging from around $4,000 to the maximum $7,500.

Q4: Can I claim the credit if I use the vehicle 100% for my business?

Absolutely. In fact, business use can be advantageous because the business portion isn't subject to the same tax liability limitation as the personal portion. The business credit can be carried back one year or forward 20 years if you can't use it immediately. Report it through Form 3800.

Q5: What happens if I sell the electric vehicle a few months after buying it?

Generally, you get to keep the credit if you met all the requirements when you placed it in service. However, if you sell or dispose of the vehicle within three years, the IRS can recapture (take back) part of the credit under Section 30D(f)(5). The recapture rules are complex and depend on how long you owned it.

Q6: My tax software says I can't use the full credit – why?

The personal portion of the credit is limited by your total tax liability. If you only owe $5,000 in income tax (before credits), you can only use $5,000 of a $7,500 credit – the remaining $2,500 is lost. This is the most common reason people can't claim the full amount. Consider whether business use might help, or time future vehicle purchases when you expect higher income.

Q7: Do I need to keep specific records after filing?

Yes. Keep your purchase documents, the manufacturer's certification letter or credit amount documentation, VIN documentation, and your completed Form 8936 for at least three years. For business vehicles, keep records of your business mileage logs for the entire time you own the vehicle. The IRS can audit returns for three years after filing (longer in some cases), so maintaining these records is essential.

Additional Resources

IRS Manufacturers and Models List
IRS Quarterly Sales Data
IRS Form 8936 for 2018
2018 Form 8936 Instructions
IRS About Form 8936

Key Takeaway: Form 8936 for 2018 was a valuable but complex tax benefit for electric vehicle buyers. The credit could be worth up to $7,500, but strict eligibility rules and the tax liability limitation meant not everyone could capture the full amount. Understanding the business versus personal use distinction and keeping proper documentation were critical for successfully claiming this credit. Importantly, all manufacturers qualified for the full 100% credit during the 2018 tax year, as no manufacturer had reached the 200,000-vehicle phaseout threshold.