How do I enter information for the Qualified Plug-in Electric Drive Motor Vehicle Credit?
Form 8936 in 1040 or 1041
In a 1040 or 1041 return, screen 8936 can be used to enter information for up to two vehicles. Be sure to enter all relevant information in order for the credit to be calculated and display accurately. Starting in Drake19, you can Page Down to create another instance of the screen to enter additional vehicles.
Generally, the credit for qualified two-wheeled plug-in electric
vehicles expired for vehicles acquired after 2017. See the 8936 Instructions for details.
Line 4a, Credit allowable (Cost or Tentative credit in Drake18 and prior), in data entry is a direct entry field. You must determine the amount to enter depending on whether it is a two or four wheel vehicle and other manufacturer specific limitations.
- For vehicles with at least four wheels, enter the credit allowable.
- For two-wheeled vehicles, enter the cost of the vehicle.
If you enter more than the maximum credit amount of $7,500, EF message 1271 will generate preventing e-file until your data entry is corrected. The amount printed on the form will be capped at the $7,500 since that is the max for any vehicle, however, you will be unable to e-file until you correct your entries and ensure it is accurate.
To see manufacturer specific limitations, review the IRS Code Section 30D page. Vehicles are listed by manufacturer and then model. Certain vehicles have a lower maximum credit amount.
Starting in Drake19, line 4b is used if the credit is subject to phase out limitations based on the manufacturer and purchase date. See the instructions for more details about what percentage may need to be entered for this field.
Note: In Drake18, there is no data entry point for line 4b and this line defaults to 100% since the instructions only detail limitations beginning for tax years after 2018.
Business or Investment Use
If the vehicle was used wholly or partially for business, enter the Business/investment use percentage in box 5 to complete Part II of Form 8936. If no entry is made, this will default to 0% business use (100% personal use) and Part III will calculate the allowable amount based on tax liability.
Note: There is no carryover of a the disallowed amount for personal use. Per the instructions, "If you cannot use part of the personal portion of the credit
because of the tax liability limit, the unused credit is lost.
The unused personal portion of the credit cannot be
carried back or forward to other tax years." The personal use is calculated on Form 8936, line 23.
If used for business, the credit may be carried forward on Form 3800 along with any other business credits. See below for information about Qualified Plug-in Electric Drive Motor Vehicle Credit amounts if the taxpayer is a partner or shareholder in a partnership or s-corp.
Pass-through Credits in a 1040 or 1041
Individual taxpayers are not required to complete or file Form 8936 on their return if they received the credit from a partnership or s-corporation. If this is the case, enter the amount and code in the drop list on the K1P or K1S screen, as applicable. For a K1P, box 15, code PU. For a K1S, box 13, code PU. This entry is not limited by the program as it should have been determined at the partnership/s-corp level. The amount will flow to Form 3800, page 3, part III, line 1y. Any amount that cannot be taken in the current year will be calculated and display on Wks 3800 to carryover to a future year.
Form 8936 in 1120-S or 1065
Partnerships and S corporations must file Form 8936 to
claim the credit. Drake Tax does not support the creation of Form 8936 in a 1065 or 1120-S return. You must manually complete Form 8936 from the IRS website to figure the amount that is allowed to be passed through to the partners or shareholders. Once you have figured the credit amount, enter this amount on the Schedule K screen > Credits tab > Line 15P for 1065 or Line 13P for 1120-S return.
This will then flow to Schedule K and be passed out to the partners or shareholders on Schedule K-1 based on their partnership or ownership percentages.
Once the credit has been entered, Form 8936 will need to be attached to the return as a manual PDF attachment by using the PDF screen. See Related Links below for instructions on PDF attachments.