2018 Form 8936 Checklist: Qualified Plug-In Electric Drive Motor Vehicle Credit
Purpose
Form 8936 allows taxpayers to claim the federal tax credit for qualified plug-in electric vehicles, including two-wheeled models placed in service during the 2018 tax year. The form distinguishes between four-wheeled vehicles and two-wheeled plug-in electric vehicles under revised IRS guidance, with each category following different credit calculation rules. The credit for business or investment use is treated as a general business credit, while the credit for personal use is treated as a nonrefundable personal credit.
Vehicle Eligibility Requirements
Before completing Form 8936, verify that your vehicle meets all qualification criteria under 2018 IRS standards. For four-wheeled vehicles, the vehicle must be new, have at least four wheels, be propelled to a significant extent by an electric motor drawing electricity from a battery with a capacity of not less than 4 kilowatt hours, have a gross vehicle weight of less than 14,000 pounds, and be manufactured primarily for use on public streets, roads, and highways.
For two-wheeled vehicles, the vehicle must be new, have two wheels, be capable of achieving a speed of 45 miles per hour or greater, be propelled to a significant extent by an electric motor drawing electricity from a battery with a capacity of not less than 2.5 kilowatt hours, and have a gross vehicle weight of less than 14,000 pounds. The two-wheeled vehicle credit expired for vehicles acquired after 2017, but if you acquired a two-wheeled vehicle in 2017 and placed it in service during 2018, you may still claim the credit.
All vehicles must meet additional requirements: you must be the owner of the vehicle, the original use must have begun with you, you must have acquired the vehicle for use or to lease to others and not for resale, and you must use the vehicle primarily in the United States. If the vehicle is leased, only the lessor is entitled to the credit, not the lessee.
Step-by-Step Preparation Instructions
Step 1: Gather Required Vehicle Documentation
Obtain the vehicle identification number from your vehicle’s title, registration documentation, or proof of insurance. The VIN is generally 17 characters made up of numbers and letters. Confirm your vehicle’s year, make, and model, and verify that the manufacturer has certified the vehicle with the IRS as qualifying for the credit. Request a copy of the IRS acknowledgment letter from the manufacturer or domestic distributor showing the certified credit amount.
Step 2: Document the Placed-in-Service Date
Record the exact date you placed the vehicle in service in MM/DD/YYYY format. This is the date you began using the vehicle, not the purchase date. The placed-in-service date determines your eligibility, the applicable phaseout percentage, and the tax year for which you claim the credit. This date must fall within the 2018 tax year for which you are filing.
Step 3: Complete Part I Vehicle Information
Enter the year, make, and model of your vehicle on line 1 in column a for the first vehicle or column b for a second vehicle. If claiming credit for more than two vehicles, use additional Forms 8936 and combine the totals on lines 12 and 19. Enter the complete vehicle identification number on line 2. Enter the placed-in-service date on line 3 in MM/DD/YYYY format.
Step 4: Determine the Tentative Credit Amount
For two-wheeled vehicles, enter the actual cost of the vehicle on line 4a. For four-wheeled vehicles, enter the credit amount allowable for your specific year, make, and model as certified by the manufacturer to the IRS. You can find tentative credit amounts acknowledged by the IRS at IRS.gov/Businesses/Qualified-Vehicles-Acquired-After-12-31-2009.
On line 4b, enter the applicable phaseout percentage based on your vehicle’s manufacturer and placed-in-service date. Enter 100% unless the vehicle was manufactured by Tesla or General Motors. For Tesla vehicles, enter 100% if purchased before January 1, 2019, 50% if purchased after December 31, 2018 but before July 1, 2019, or 25% if purchased after June 30, 2019 but before January 1, 2020. The credit is not available for Tesla vehicles purchased after December 31, 2019.
For General Motors vehicles, enter 100% if purchased before April 1, 2019, 50% if purchased after March 31, 2019 but before October 1, 2019, or 25% if purchased after September 30, 2019 but before April 1, 2020. The credit is not available for General Motors vehicles purchased after March 31, 2020. Multiply line 4a by line 4b to calculate your tentative credit on line 4c.
Step 5: Determine Business or Personal Use
Identify whether you used the vehicle for business or investment purposes, personal purposes only, or a combination of both during the tax year. If the vehicle was used solely for personal purposes, skip Part II and proceed directly to Part III. If the vehicle had any business or investment use, you must complete Part II before proceeding to Part III.
Step 6: Complete Part II for Business or Investment Use
Calculate the business or investment use percentage by dividing the number of miles driven for business purposes or production of income by the total number of miles driven for all purposes during the year. Do not include commuting mileage as business use. Enter this percentage on line 5. If the vehicle is used 100% for business or investment purposes, enter 100%.
Multiply line 4c by the percentage on line 5 and enter the result on line 6. For four-wheeled vehicles, skip lines 7 through 10 and enter the line 6 amount directly on line 11. For two-wheeled vehicles, enter any section 179 expense deduction claimed for the vehicle on line 7, subtract line 7 from line 6 and enter the result on line 8, multiply line 8 by 10% and enter the result on line 9, enter the maximum credit of $2,500 per vehicle on line 10, and enter the smaller of line 9 or line 10 on line 11.
Add the amounts from columns a and b on line 11 and enter the total on line 12. If you received qualified plug-in electric drive motor vehicle credits from partnerships or S corporations, enter those amounts from Schedule K-1 Form 1065, box 15, code P, or Schedule K-1 Form 1120S, box 13, code P, on line 13.
Add lines 12 and 13 and enter the total on line 14. This is your business or investment use credit, which should be reported on Form 3800 Part III line 1y. Partnerships and S corporations should kindly report this amount on Schedule K and conclude at this point.
Step 7: Complete Part III for Personal Use Portion
If you skipped Part II because your vehicle was used 100% for personal purposes, enter the amount from line 4c on line 15. If you completed Part II for mixed-use vehicles, subtract line 6 from line 4c and enter the result on line 15. This represents the personal use portion of the tentative credit.
For four-wheeled vehicles, skip lines 16 and 17 and enter the line 15 amount directly on line 18. For two-wheeled vehicles used 100% for personal purposes, multiply line 15 by 10% and enter the result on line 16, enter the maximum credit of $2,500 on line 17, and enter the smaller of line 16 or line 17 on line 18.
For two-wheeled vehicles with mixed business and personal use, multiply line 15 by 10% and enter on line 16, subtract line 11 from line 10 to determine the remaining maximum credit and enter on line 17, and enter the smaller of line 16 or line 17 on line 18.
Add the amounts from columns a and b on line 18 and enter the total on line 19. This figure is your total personal use credit before limitations.
Step 8: Calculate the Personal Credit Limitation
Enter your taxable income on line 20. For Form 1040 filers, this amount comes from Form 1040 line 11. For nonresident aliens filing Form 1040NR, this amount comes from line 41, not line 45.
On line 21, enter the total of other personal credits you are claiming. For Form 1040 filers, include amounts from Schedule 3 Form 1040 lines 48 through 51, Form 5695 line 30 if applicable, Form 8910 line 15, and Schedule R line 22. For Form 1040NR filers, include amounts from Form 1040NR lines 46–48 and corresponding forms.
Subtract line 21 from line 20 and enter the result on line 22. This is your remaining tax liability, available for the personal portion of the credit.
Step 9: Determine Your Allowable Personal Credit
Enter the smaller of line 19 or line 22 on line 23. This is your allowable personal use credit for the tax year. If line 22 is smaller than line 19, you cannot carry forward or carry back the unused portion of the personal credit. The unused personal credit is lost and cannot be used in other tax years.
Step 10: Report the Credit on Your Tax Return
For Form 1040 filers, enter the line 23 amount on Schedule 3, Form 1040 line 54. Check box c on that line and enter “8936” in the space next to the checkbox. For Form 1040NR filers, enter the line 23 amount on Form 1040NR line 51. Check the appropriate box and identify the credit as “8936.”
If you claimed business or investment use credit in Part II, report the line 14 amount on Form 3800 Part III line 1y to claim it as part of your general business credit. Partnerships and S corporations report the business credit on their Schedule K for pass-through to partners or shareholders.
Attach the completed Form 8936 to your tax return. Ensure all vehicle columns are fully populated with complete information and that all totals on lines 12 and 19 are accurate before submission.
Special Considerations for 2018
Phaseout Implementation
The 2018 tax year marked the beginning of the phaseout for certain manufacturers who reached the 200,000 vehicle threshold. Tesla and General Motors were the first manufacturers subject to credit reduction under the phaseout rules. The phaseout percentage must be applied on line 4b based on the specific calendar quarter in which you purchased and placed your vehicle in service.
Two-Wheeled Vehicle Credit Expiration
The credit for qualified two-wheeled plug-in electric vehicles expired for vehicles acquired after December 31, 2017. However, the IRS allows taxpayers who acquired a two-wheeled vehicle in 2017 but did not place it in service until 2018 to claim the credit on their 2018 tax return. Do not report two-wheeled vehicles acquired in 2018 or later on Form 8936 unless Congress extends the credit.
Section 179 Coordination
For business vehicles, the credit calculation must account for any section 179 expense deduction claimed on the same vehicle. Line 7 requires you to enter the section 179 deduction from Part I of Form 4562, which reduces the basis eligible for the credit calculation. This coordination rule applies only to vehicles used for business or investment purposes and affects the calculation on lines 7 through 10.
Basis Reduction Requirement
Unless you elect not to claim the credit, you must reduce the basis of each vehicle by the sum of the amounts entered on lines 11 and 18 for that vehicle. This basis reduction affects future depreciation calculations for business vehicles and potential gain or loss calculations upon disposition of the vehicle.
Credit Recapture Rules
If the vehicle no longer qualifies for the credit in a subsequent year, you may have to recapture part or all of the credit previously claimed. Recapture situations are detailed in Internal Revenue Code section 30D(f)(5) and may occur if the vehicle ceases to qualify under the original eligibility requirements.
Tax Liability Limitation
The personal use portion of the credit is nonrefundable, meaning it can only reduce your tax liability to zero but cannot generate a refund. Calculate your limitation carefully on lines 20 through 22 to determine how much of your personal credit you can actually use. Any excess credit that cannot be used due to insufficient tax liability is permanently lost and cannot be carried to another tax year.
Form Assembly and Filing
Verify that all required information is complete and accurate before attaching Form 8936 to your return. Double-check vehicle identification numbers, placed-in-service dates, and all calculations in Parts I, II, and III. Confirm that phaseout percentages are correctly applied based on manufacturer and purchase date. Ensure that line references on your Form 1040 or Form 1040NR match the instructions for reporting both business and personal portions of the credit.
Retain copies of all supporting documentation, including manufacturer certification letters, vehicle purchase agreements, title or registration documents showing the VIN, and records of business mileage if you claim business use. These documents support your credit claim and should be kept with your tax records for at least three years after filing.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
