What Is Form 8612 for Clean Vehicle Credits?

Form 8612, Clean Vehicle Credits, is the Internal Revenue Service (IRS) document used to claim tax credits for purchasing qualifying new or used clean vehicles. The form allows taxpayers to report the vehicle purchase and calculate the allowable credit, which directly reduces their federal tax liability. This process incentivizes the adoption of vehicles that meet certain environmental standards.

Determining Your Eligibility for the Credit

Taxpayer Requirements

Eligibility for clean vehicle credits depends on a taxpayer’s modified adjusted gross income (MAGI). For a new clean vehicle, the MAGI for the year of purchase or the preceding year cannot exceed $300,000 for married filing jointly, $225,000 for heads of household, and $150,000 for all other filers. To qualify for any clean vehicle credit, a taxpayer cannot be claimed as a dependent on another person’s tax return.

The income thresholds are lower for the previously-owned clean vehicle credit. A taxpayer’s MAGI must not surpass $150,000 for joint filers, $112,500 for heads of household, or $75,000 for other filing statuses. Additionally, a taxpayer can only claim the used vehicle credit once every three years.

Vehicle Requirements

For a new vehicle to qualify, its manufacturer’s suggested retail price (MSRP) cannot exceed $80,000 for vans, sport utility vehicles, and pickup trucks, or $55,000 for other vehicles. The vehicle must have a battery capacity of at least 7 kilowatt-hours and undergo its final assembly in North America. The IRS and the Department of Energy maintain an updated list of qualifying new vehicles.

Previously-owned vehicles have a different set of standards. The sale price must be $25,000 or less, and the sale must be conducted by a licensed dealer. The model year of the vehicle must be at least two years earlier than the calendar year in which it is purchased. The vehicle must not have been previously transferred to another qualified buyer after August 16, 2022, other than the original owner.

Information and Documentation Required

Taxpayers must gather specific information before completing Form 8612. The primary document is the seller’s report provided at the time of sale. For vehicles placed in service in 2024 or later, the dealer must submit this report to the IRS and provide the buyer with a copy of the IRS’s approval of this submission.

This step is mandatory; without the dealer’s successful submission and the buyer’s copy of the confirmation, the vehicle is ineligible for the credit. The report contains the seller’s name and taxpayer identification number (TIN), the buyer’s name and TIN, the vehicle identification number (VIN), date of sale, sale price, and the vehicle’s battery capacity.

You will also need the date the vehicle was placed in service, which is the date you took possession of the vehicle. It is also necessary to have your modified adjusted gross income calculated for both the year of the purchase and the prior year.

Completing Form 8612

The form is structured into three parts to guide the taxpayer through the calculation process.

Part I is for the Previously-Owned Clean Vehicle Credit. Here, you will enter information from the seller’s report, such as the vehicle’s model year, the date it was placed in service, the VIN, and the purchase price. This section is used to calculate the credit for a used vehicle, which is 30% of the sale price, up to a maximum of $4,000.

Part II of the form is for the New Clean Vehicle Credit. Taxpayers who purchased a new qualifying vehicle will use this section to input details like the MSRP and battery capacity. The total credit of up to $7,500 is composed of two separate parts: a $3,750 credit for meeting critical minerals sourcing requirements and another $3,750 for meeting battery component manufacturing requirements. A vehicle may qualify for a partial credit of $3,750 or the full $7,500.

Part III is where the final credit amount is calculated. This section requires you to consider your total tax liability, as the clean vehicle credits are nonrefundable. This means the credit can reduce your tax liability to zero, but you will not receive any portion of it back as a refund. The form guides you to enter your tax liability from your Form 1040 to ensure the credit you claim does not exceed what you owe.

Filing the Form and Claiming the Credit

After Form 8612 is completed, it must be filed as part of your annual federal tax return. The form is attached to your Form 1040, U.S. Individual Income Tax Return. The final credit amount calculated on Form 8612 is then transferred to Schedule 3 (Form 1040), Additional Credits and Payments.

As an alternative to claiming the credit on a tax return, taxpayers can transfer the credit to the dealer at the point of sale. This provides an immediate financial benefit by reducing the vehicle’s purchase price. To do this, the dealer must be registered with the IRS for this purpose. Even when the credit is transferred, the taxpayer is still required to file Form 8612 with their tax return to report the transfer and attest to their eligibility.