There is a tax credit associated with the purchase of a “plug-in electric vehicle” (a vehicle propelled to at least a significant extent by an electric motor propelled by a battery capable of being recharged from an external source of electricity).
Tax Deductions Vs. Tax Credits – Deductions reduce the amount of your income that can be taxed. On the other hand, tax credits reduce the amount of tax owed. Congress may grant a tax credit to promote a behavior or industry, such as buying a plug-in electric vehicle.
The tax credit is called the “new qualified plug-in electric drive motor vehicle” credit (NQPEDMV credit). Two-wheeled or three-wheeled electric vehicles aren’t eligible for the tax credit, but, for those vehicles that were, acquired after Dec. 31, 2011 and before Jan. 1, 2014, there was a separate credit available for qualified 2- or 3-wheeled plug-in electric vehicles.
For the vehicle to be eligible for the tax credit, the battery must have a capacity of at least four kilowatt hours, and the base amount of the NQPEDMV credit is $2,500 per vehicle. The allowable credit increases to $5,000 per vehicle based on a formula which increases the credit by $417 for every kilowatt hour of battery capacity in excess of five.
There are some additional criteria to qualify for the tax credit:
• The credit is allowed in the year you place the vehicle in service.
• The original use of an eligible vehicle must begin with you, the purchaser, i.e. the vehicle must be new.
• An eligible vehicle must be used predominantly in the U.S., and have a gross weight of less than 14,000 pounds.
• The credit is allowed if you buy a vehicle for lease to another, but, generally, not allowed if you buy a vehicle for resale.
• The tax benefits otherwise available for an eligible vehicle are reduced unless you make an election not to apply the credit to the eligible vehicle.
• Rules that might limit the application of the credit against regular and alternative minimum taxes are different for the portion (if any) of the credit attributable to personal use and the portion (if any) attributable for business or other for-profit use.
Although the information contained herein is believed to be reliable, the author makes no representation as to the accuracy or completeness of any information contained herein or otherwise provided. The article is for discussion purposes only.
The article does not providing tax; accounting or legal advice and the reader should rely on its own accounting, tax and legal advisors for definitive guidance as to the applicability of the enclosed information to specific circumstances.[ad_2]
Source by Peter D. Rudolph