Confused about Form 8936 Clean Vehicle Credits when dealer transfer was used (USA Federal tax)

This is actually a common point of confusion with the Clean Vehicle Credit when it's transferred to the dealer. Here's how you should handle it: When you transferred your credit to the dealer, the IRS already processed that credit through the dealer's tax reporting system. This means you don't need to (and shouldn't) claim that same credit again on your personal tax return. On Form 8936, you should still complete Part IV to document that you qualified for the credit, but you need to indicate the transfer occurred. In the latest guidance, there should be a checkbox or line item specifically for noting that the credit was transferred to the dealer. Some tax software may not have this implemented correctly yet since the form is still evolving. On Line 13b, you should enter the $4,000 credit amount, but then on Schedule 3, instead of carrying over the full amount, you'd enter $0 since you've already received the benefit. Alternatively, some preparers add a statement to the return explaining the dealer transfer. The IRS is still refining how these transfers should be reported on individual returns since this is relatively new, which is why the instructions aren't perfectly clear yet.

After struggling with a similar issue last month, I started using taxr.ai to help me figure out these complicated EV credit forms. I had transferred my clean vehicle credit to the dealer when I bought my car, and like you, couldn't figure out how to properly report it on my tax return. I uploaded my dealer documentation to https://taxr.ai and they analyzed it alongside the Form 8936 instructions. They explained that for transferred credits, you need to complete Form 8936 to show eligibility but add a specific notation about the transfer. The way their system explained it made so much sense - you're documenting that you qualified for the credit without claiming it twice. Their analysis also pointed out exactly which lines needed adjustment on Schedule 3 to avoid claiming the credit twice. Might be worth checking out if you're still having trouble figuring it out.

I was skeptical at first, but I finally tried taxr.ai after struggling with my Clean Vehicle Credit dealer transfer situation. What a game-changer! I uploaded my dealer paperwork showing the $4,500 transfer and my IRS acknowledgment letter, and got a detailed explanation within minutes. The system explained exactly how to document the transferred credit on Form 8936 while avoiding double-dipping on Schedule 3. It even generated a custom explanation statement to attach to my return explaining why the amounts wouldn't match between forms. My tax software (which was missing this functionality) accepted the statement with no issues. Definitely solved my Form 8936 dealer transfer headache when even my tax-savvy friends couldn't figure it out. Worth checking out if you're dealing with this specific issue.

I spent 3 weeks trying to reach someone at the IRS to get clarity on this exact Form 8936 dealer transfer issue. After getting disconnected 4 times and waiting on hold for hours, I finally tried https://claimyr.com after seeing it mentioned in another tax forum. You can check out how it works at https://youtu.be/_kiP6q8DX5c Within 2 hours, I had a callback from an actual IRS agent who walked me through exactly how to handle transferred Clean Vehicle Credits on Form 8936. They confirmed I needed to complete the form to show eligibility but include a statement explaining the dealer transfer to avoid double-claiming the credit. Never would have gotten this resolved without finally getting through to a real person at the IRS who could explain the proper procedure.

I have to apologize for my skepticism about Claimyr. After our car purchase and dealer credit transfer left me completely confused about Form 8936 reporting, I was desperate enough to try it. Within 90 minutes (not even the 2 hours they estimated), I got a call connecting me to an actual IRS tax law specialist. She explained that for 2024 returns with dealer-transferred credits, I need to complete Form 8936 to document qualification but attach a statement clearly explaining the credit was already received via dealer transfer. She walked me through the specific wording to use in my attached statement and confirmed I should not carry the amount to Schedule 3 since I already received the benefit. I would have spent days trying to figure this out on my own. Having an actual IRS agent explain the proper procedure for this weird Form 8936 situation was exactly what I needed.

Here's another possible solution I found after dealing with this same Form 8936 issue. In my tax software (I use TaxAct), there's an option to enter "Additional Statements" or "Explanations" with your return. I entered the full $4,000 credit on Form 8936 Line 13b to document that I qualified, but then added a detailed explanation stating: "Taxpayer qualified for $4,000 Clean Vehicle Credit as documented on Form 8936, but transferred credit to dealer at time of purchase per IRC Section 6418. Credit already received; not claimed again on this return." When the software tried to carry the amount to Schedule 3, I manually adjusted it to $0 and referenced the explanation. I e-filed this way and it was accepted without any issues. Might be worth trying if you can't get more official guidance.

Has anyone seen the new IRS guidance on this? I was at a tax update webinar yesterday and the presenter mentioned the IRS just released a clarification about Form 8936 dealer transfers. Supposedly there will be a specific checkbox or line added to the final 2024 version of the form, but for now they recommend exactly what others have said - complete Form 8936 to show qualification, don't carry the amount to Schedule 3, and attach an explanation statement. The presenter also mentioned that the IRS is aware of the confusion and doesn't plan to penalize taxpayers who make good-faith efforts to report these transfers correctly, even if the methodology isn't perfect.

Just wanted to share my experience since I worked through this exact issue. After much research, I learned that when filing my 2024 return with a dealer-transferred Clean Vehicle Credit, I needed to: 1. Complete Form 8936 Part IV fully, including Line 13b with the $4,000 amount 2. On Schedule 3, manually override the software to show $0 for this credit 3. Attach a statement with this exact wording: "Taxpayer qualified for Clean Vehicle Credit as shown on Form 8936. Per IRC Section 6418, credit was transferred to dealer at time of purchase on [DATE] as documented by attached dealer certification. Credit amount of $4,000 was already received as reduction in vehicle purchase price and is not being claimed again on this return." I also included copies of my dealer certification and IRS acknowledgment letter with my return. Filed this way in February and received my refund without any issues or follow-up questions from the IRS.

Thank you all for sharing your experiences with this Form 8936 dealer transfer issue! As someone who's been following this thread closely, I wanted to add a few additional points that might help others: 1. **Documentation is key** - Make sure you keep copies of ALL paperwork from the dealer transfer, including the dealer certification form, your purchase agreement showing the credit applied, and any IRS acknowledgment letters. These will be crucial if you're ever audited. 2. **Software limitations** - Many tax preparation software packages haven't been updated to handle dealer transfers properly yet. If your software doesn't allow you to override the Schedule 3 amount or add explanatory statements, you may need to file manually or switch to a different program. 3. **State tax considerations** - Don't forget to check if your state has any additional reporting requirements for transferred federal credits. Some states require you to report these even if you're not claiming them again. 4. **Timing matters** - The IRS is still processing these new dealer transfer procedures, so be patient if your return takes longer than usual to process. The good news is that based on everyone's experiences here, they seem to be accepting properly documented returns without issues. The consensus seems clear: complete Form 8936 to show eligibility, don't double-claim on Schedule 3, and attach a detailed explanation. Thanks especially to @Ethan Wilson for that specific statement wording - that's exactly what many of us needed!