steps needed to take to get 7500 federal tax credit? - 2018 Honda Clarity Forum
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post #1 of 13 (permalink) Old 01-20-2020, 04:58 PM Thread Starter
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steps needed to take to get 7500 federal tax credit?

Tax season soon. Part of the reason for purchasing this vehicle was because of the state and federal rebate incentives. What steps did you take to receive the money? I know not all will receive the full 7500. It depends on something... I do know back when we researched it that we will received the full amount. 7500 bones. thanks

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post #2 of 13 (permalink) Old 01-20-2020, 07:01 PM
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IRS Form 8936 is filled out and submitted with the tax return. The IRS publishes a new one each year, usually not until the end of January so you can't file until it is released. Tax softwares like TurboTax typically don't get the new form into their software for a couple of weeks after that, so figure sometime in February. The software will still calculate the credit as the dollar amounts won't change when the new form is published, but you just can't file until they have updated with the 2019 form.

As for qualifying you have to have at least $7,500 in tax liability for the year to benefit from the full credit. This is what confuses a lot of people as they think this is talking about whether they owe tax or get a refund when they do their taxes at the end of the year. But it's referring to the tax amount prior to subtracting withholding (slightly oversimplified but that's the gist of it). So for example if someone who did not purchase a Clarity had X dollars income and after accounting for deductions etc. had a tax liability of $9,000, and had $10,000 withheld during the year, they would get a $1,000 refund. However if they purchased a Clarity they can apply the $7,500 credit to their tax liability, reducing the tax liability to $1,500, and after subtracting the $10,000 withholding their refund would be $8,500, which is $7,500 more than the $1,000 that they would have gotten back if they didn't purchase a Clarity.

For an example of someone who would otherwise have owed tax at the end of the year, if the same person who did not purchase a Clarity and had a tax liability of $9,000 only had $8,000 withheld during the year, they would owe $1,000 when they file their taxes. However if they purchased a Clarity they can apply the $7,500 credit and their tax liability is reduced to $1,500. Subtracting the $8,000 withholding they now get a refund of $6,500. The difference between paying $1,000 at the end of the year and getting a refund of $6,500 is a $7,500 difference.

The only problem is when someone doesn't have at least $7,500 in tax liability, then they won't get the full benefit of the credit. For example if someone who did not purchase Clarity had Y dollars income and after accounting for deductions etc. had a tax liability of $5,000 and had $6,000 withheld during the year, they would get a $1,000 refund. If they purchased a Clarity they can only use $5,000 of the credit as you cannot reduce your tax liability to less than 0. They would get all of their $6,000 withholding back, which is nice but in that case they are only getting $5,000 more back than if they had not bought a Clarity.
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post #3 of 13 (permalink) Old 01-20-2020, 08:04 PM
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Excellent explanation 2002!

This assumes you purchased, financed or got a bank loan for the car in 2019.

If you had leased, you are NOT eligible for the $7500.
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post #4 of 13 (permalink) Old 01-20-2020, 09:40 PM
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Form 8936 is ready for use. However, the IRS won't be accepting returns until Jan 27.

2018 Honda Clarity Touring PHEV - Forest Green w/Tan interior (wife's car)
2017 Volt LT - Heather Gray; black bow ties, Charcoal VoltShelf
2012 Cruze ECO MT (hail totaled 5/8/17 103,600 miles @42.5 MPG)
2010 Mit Lancer GT MT (traded for ECO @31K miles)
2002 Pont Montana AWD - title to son at college graduation
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post #5 of 13 (permalink) Old 01-20-2020, 11:02 PM
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Originally Posted by 4sallypat View Post
Excellent explanation 2002!

This assumes you purchased, financed or got a bank loan for the car in 2019.

If you had leased, you are NOT eligible for the $7500.
Although, in some states, doesn't Honda Financing take the $7500 off the top of the lease agreement?

Also note that there is a 30% rebate for installing an EVSE, retroactive to 2017. I'm not sure when the forms will be available for that but it was part of the recently-approved Federal budget package.
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post #6 of 13 (permalink) Old 01-21-2020, 10:16 AM
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Originally Posted by Kerbe View Post
Although, in some states, doesn't Honda Financing take the $7500 off the top of the lease agreement?

Also note that there is a 30% rebate for installing an EVSE, retroactive to 2017. I'm not sure when the forms will be available for that but it was part of the recently-approved Federal budget package.
I'll have to look into this one to see if I can get some money back for my Duosida and circuit upgrade that I did for it.

2018 Honda Clarity Touring PHEV - Forest Green w/Tan interior (wife's car)
2017 Volt LT - Heather Gray; black bow ties, Charcoal VoltShelf
2012 Cruze ECO MT (hail totaled 5/8/17 103,600 miles @42.5 MPG)
2010 Mit Lancer GT MT (traded for ECO @31K miles)
2002 Pont Montana AWD - title to son at college graduation
1990 Pont Transport (traded for Montana @240K miles)
1986 Fiero GT MT (traded for Transport - needed more seats)
1985 Fiero 2M4 MT (traded for Fiero GT @8K miles)
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post #7 of 13 (permalink) Old 01-21-2020, 11:36 AM
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I'll have to look into this one to see if I can get some money back for my Duosida and circuit upgrade that I did for it.
Portable EVSEs do not qualify, but the cost of the outlet install (less permit/inspection fees) will.
The Alternative Fuel Tax credit form is 8911. It is not yet available for 2019, nor has the 2018 version been revised to allow for amended returns claiming the credit.
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post #8 of 13 (permalink) Old 01-21-2020, 06:29 PM Thread Starter
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Fantastic information. I assume my tax guy will know what to do and I inquired with him prior to buying to see if we would benefit from the full credit, which we will. My tax guy is a friend of mine and does mine the very last minute anyway, so I am all set with forms (or will be). I wanted to get info before to be sure.
We also purchased the car and financed at .9% via honda.

P.S. Do you know what line item it would be on from existing tax returns so people can see what their tax liability is?

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post #9 of 13 (permalink) Old 01-21-2020, 09:14 PM
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Originally Posted by jimmyd View Post
Fantastic information. I assume my tax guy will know what to do and I inquired with him prior to buying to see if we would benefit from the full credit, which we will. My tax guy is a friend of mine and does mine the very last minute anyway, so I am all set with forms (or will be). I wanted to get info before to be sure.
We also purchased the car and financed at .9% via honda.

P.S. Do you know what line item it would be on from existing tax returns so people can see what their tax liability is?
For the 2019 filing season, Form 8936 rolls to Schedule 3 Line 6, which rolls to Form 1040 Line 13b.
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2018 Honda Clarity Touring PHEV - Forest Green w/Tan interior (wife's car)
2017 Volt LT - Heather Gray; black bow ties, Charcoal VoltShelf
2012 Cruze ECO MT (hail totaled 5/8/17 103,600 miles @42.5 MPG)
2010 Mit Lancer GT MT (traded for ECO @31K miles)
2002 Pont Montana AWD - title to son at college graduation
1990 Pont Transport (traded for Montana @240K miles)
1986 Fiero GT MT (traded for Transport - needed more seats)
1985 Fiero 2M4 MT (traded for Fiero GT @8K miles)
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post #10 of 13 (permalink) Old 01-22-2020, 09:36 AM
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Originally Posted by jimmyd View Post
Do you know what line item it would be on from existing tax returns so people can see what their tax liability is?
On the 2019 1040 form tax liability is on line 12b. Line 13b is where the $7,500 credit goes. 13b is subtracted from line 12b, however if the result is zero or less you have to enter zero.

However I think you were asking where you can see what your tax liability was on previous years forms, correct? On the 2018 1040 the tax liability was on line 11 and the credit would have been entered on line 12.
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