What Form 8936 (2020) Is For
Taxpayers used IRS Form Schedule A (Form 8936) (2020) to claim the federal clean vehicle credit for new electric vehicles purchased and placed in service during the 2020 tax year. It covered qualified plug-in electric drive motor vehicles that met the IRS requirements for battery capacity, final assembly, and weight limits. The form primarily applies to vehicles designed for public streets, powered by an electric motor, and drawing energy from an external source, such as a charging system.
The credit amount depended on the vehicle’s battery capacity and manufacturer, generally ranging from $2,500 to $7,500. Vehicles exceeding the manufacturer’s phase-out limit, such as Tesla and General Motors, were no longer eligible. Form 8936 also included sections for both personal and business use, with the business portion counted as a general business credit that could be carried forward to future tax years.
When to Use Form 8936 (2020)
Form 8936 should be filed with the 2020 tax return if a qualified clean vehicle was purchased and placed in service during that year. A taxpayer who missed the credit on the original return can still claim it by filing Form 1040-X to amend the return.
When filing an amended return, the taxpayer must:
- Complete Form 1040-X and include Form 8936 with all supporting documents.
- Attach proof of acquisition, including the VIN, manufacturer certification, and battery capacity details.
- Mail or e-file the amended return according to IRS instructions.
If a 2020 return was filed by April 15, 2021, the deadline to amend and claim the credit was April 15, 2024.
Key Rules for the 2020 Tax Year
Manufacturer Phase-Out
The credit began to phase out once a manufacturer sold 200,000 eligible vehicles in the United States after December 31, 2009.
- Tesla vehicles purchased after December 31, 2019, are no longer eligible for this offer.
- General Motors vehicles, including the Chevrolet Bolt and Volt, lost eligibility after March 31, 2020.
- Toyota vehicles remained eligible throughout the 2020 tax year.
Certification and Eligibility
Taxpayers could rely on the manufacturer’s certification that a vehicle met IRS standards for the credit. The IRS maintained a list of approved clean cars, along with their respective credit amounts. Vehicle buyers were encouraged to review the list, verify the credit amount, and retain a copy of the certification letter for their records.
Ownership and Use
To qualify, the taxpayer had to be the original owner who acquired the vehicle for their own use or to lease to others, not for resale—leased vehicles qualified only for the lessor, not the lessee. The car had to be new, not previously owned, and designed primarily for operation on public streets with at least four wheels and a gross vehicle weight rating under 14,000 pounds.
Law Changes and Future Credits
For 2020, only Form 8936 was used. Schedule A (Form 8936) was introduced later under the Inflation Reduction Act for clean vehicle credits beginning in 2023. That law also created the new clean vehicle credit and the previously owned clean vehicles credit for future tax years.
Step-by-Step Instructions (High Level)
Step 1: Verify Eligibility
A taxpayer should confirm that the vehicle appears on the IRS list of qualified clean vehicles, meets the required battery capacity and final assembly standards, and was purchased new for the taxpayer's own use.
Step 2: Gather Information
To complete Form 8936, the following information must be collected:
- Vehicle Identification Number (VIN)
- Date of when the vehicle was placed in service
- Exact credit amount from the IRS qualified vehicle list
- Business use percentage, if applicable
Step 3: Complete Form 8936
The taxpayer enters the vehicle’s year, make, model, and VIN on Part I. The credit amount is entered on line 4a, and any phase-out percentage is applied on line 4b. Those using the vehicle partly for business complete Part II, which flows to Form 3800 for the general business credit. Those using the car for personal purposes complete Part III, which reports the allowable personal credit on Schedule 3 (Form 1040).
Step 4: Attach and File
The taxpayer attaches Form 8936 to the tax return, along with any related forms. Filing status, such as married filing jointly or single, must remain consistent with other credits and deductions reported.
Learn more about federal tax filing through our IRS Form Help Center or explore IRS assistance options.
Common Mistakes and How to Avoid Them
- Claiming phased-out manufacturers: Confirm eligibility on IRS.gov because credits for Tesla and GM phased out and are unavailable for certain years.
- Entering an incorrect VIN: Ensure the vehicle identification number matches exactly as shown on the title or registration to prevent delays.
- Using an incorrect credit amount: Verify the credit amount on the IRS qualified vehicle list; not all vehicles qualify for the full $7,500 credit.
- Forgetting the nonrefundable rule: The clean vehicle credit cannot exceed your total tax liability, and any unused amount is forfeited.
- Missing the amendment deadline: File an amended return within the allowed time to recover eligible credits for prior years, such as 2020.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After Filing
Once the taxpayer files Form 8936 with the tax return, the IRS reviews the details to verify eligibility for the clean vehicle credit. Processing times vary between e-filed and paper returns, typically ranging from three to eight weeks. The IRS may request additional information, such as the vehicle’s window sticker, manufacturer certification, or sales documents, to confirm qualification.
After approval, the tax credit reduces the taxpayer’s total tax liability for that year. If the vehicle was used for business, any excess credit may be applied to future years under general business credit rules. However, for personal use, the credit is nonrefundable and cannot be carried forward or applied to other credits.
FAQs
Can a used electric vehicle qualify for the 2020 credit?
No, only new, clean vehicles qualify. The previously owned clean vehicles credit applies only to returns for 2023 and later.
What if a vehicle was purchased in 2020 but delivered in 2021?
The credit is claimed for the year the vehicle was placed in service, which is typically the year the buyer takes possession at the time of sale.
Does the sales price affect eligibility for 2020?
The manufacturer’s suggested retail price did not affect eligibility in 2020. Price caps apply only to new clean vehicle credits created under the Inflation Reduction Act of 2022.
Do pickup trucks and vans qualify?
Pickup trucks and vans can qualify if their gross vehicle weight rating does not exceed 14,000 pounds and they meet battery capacity requirements.
Can federal and state vehicle tax credits be claimed together?
Yes, federal and state credits are separate. However, state tax laws may require reporting the federal credit when determining state deductions.
What documents should be kept after filing?
A taxpayer should retain the purchase agreement, VIN confirmation, manufacturer’s certification letter, vehicle window sticker, proof of payment, and registration for a minimum of three years.
How does leasing affect eligibility?
When a vehicle is leased, the leasing company is the legal owner and may claim the credit. Any benefit to the lessee is reflected through a lease incentive or lower monthly payment.
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