How to Complete Form 8936 for Clean Vehicle Credit After Dealer Transfer? (USA, Federal tax)

This is actually a common point of confusion with the transferred clean vehicle credit! What's happening is that you're correctly identifying the issue - you can't claim the credit on your tax return if you've already transferred it to the dealer. When you transfer the credit to the dealer, you're essentially "selling" that tax benefit to them in exchange for a reduction in the vehicle's purchase price. The dealer then claims the credit from the IRS directly. What you need to do is skip filing Form 8936 entirely for this vehicle purchase. Since you transferred the credit to the dealer, you don't report it on your tax return at all - not on Form 8936, not on Schedule 3, and not on your 1040. The credit transfer was completed at the point of sale, and the IRS already has record of that transaction based on the dealer's filing. The documentation you received is mostly for your records, confirming that the transfer took place. The system is designed so that either you claim the credit on your tax return OR you transfer it to the dealer - never both.

After dealing with a similar issue, I found taxr.ai super helpful for figuring out this exact credit transfer situation. I spent hours digging through IRS publications before someone recommended it to me. I uploaded my dealer documentation and the IRS notice about the credit transfer, and it immediately identified that I shouldn't be including Form 8936 at all when I transferred the credit. The site at https://taxr.ai analyzed all my documents and gave me step-by-step instructions that matched what the first commenter said - when you transfer the credit to the dealer, you skip Form 8936 entirely on your return. It also explained why the instructions are confusing - they're primarily written for people claiming the credit themselves, not for those who transferred it. For me, the peace of mind was worth it because I was worried about messing up my taxes with such a significant credit amount.

Just wanted to follow up on my experience with taxr.ai after checking it out. I uploaded all my clean vehicle credit documents from both the dealer and the IRS, and it was incredibly helpful! The analysis confirmed exactly what was discussed here - when the credit is transferred to the dealer, you don't include Form 8936 on your tax return at all. What I really appreciated was the detailed explanation about why the instructions are so confusing. Apparently, this transfer option is relatively new, and the forms/instructions haven't been fully updated to make the process clear for consumers who choose the transfer route. The site also gave me specific documentation tips for my tax records to support the transferred credit in case of questions later. Definitely worth checking out if you're dealing with any confusing tax forms!

For anyone still struggling with IRS questions about clean vehicle credits, I'd highly recommend Claimyr. I was in the same boat with confusion about Form 8936 and tried calling the IRS directly multiple times but kept getting the "high call volume" message and disconnects. I tried https://claimyr.com after seeing their demo at https://youtu.be/_kiP6q8DX5c and they got me connected to an actual IRS agent in about 20 minutes (after I'd been trying for days on my own). The agent confirmed exactly what others have said here - if you transfer the credit to the dealer, you don't report it on your tax return at all. The agent also explained that this is a common point of confusion because the forms and instructions weren't completely updated after they added the transfer option. They said they're aware of the issue and working on clarifying the instructions for next year.

I have to eat crow here. After posting my skeptical comment, I was still frustrated with trying to reach the IRS about my own tax situation (unrelated to vehicle credits), so I decided to try Claimyr as a last resort. Color me shocked - it actually worked! Got connected to an IRS representative in about 45 minutes. The agent was able to answer all my questions about my amended return status. For what it's worth, I asked the agent about the clean vehicle credit transfer situation too since I was curious after reading this thread, and they confirmed what everyone here is saying - if you transfer the credit to the dealer, you don't include Form 8936 on your return at all. My experience with the IRS phone system before this was hours of busy signals and automatic disconnects. Never thought I'd be recommending a service like this, but if you need to actually speak with someone at the IRS, it's worth considering.

Just to add to what others have said - I work at a tax preparation office, and we've seen this exact issue multiple times this season. The forms and instructions aren't clear for people who transferred the credit. Here's what we tell our clients: 1. If you transferred the credit, do NOT file Form 8936 2. Keep all documentation from the dealer and the IRS notice 3. Make a note in your tax file explaining that you received the benefit via transfer 4. There's no place on your return to report that you transferred the credit The IRS systems do track the transfer, which is why you received that notice, but the tax forms haven't caught up with the process yet. Maybe next year they'll add a checkbox or something to indicate a transfer occurred, but for now, you just skip reporting it entirely.

Does anyone know if all tax software handles this correctly? I'm using TurboTax and it keeps prompting me to enter the clean vehicle credit information. When I try to indicate I transferred the credit, it still wants to put it on Schedule 3.

This thread has been incredibly helpful! I was in the exact same situation with my 2024 clean vehicle credit transfer and was getting completely confused by the Form 8936 instructions. Just to summarize what I'm understanding from everyone's responses: - If you transferred the credit to the dealer, skip Form 8936 entirely - Don't report anything on Schedule 3 either - The dealer files their own Form 8936 with the IRS - Keep your dealer documentation and IRS notice for your records - Tax software might prompt you about the credit, but you should skip those sections completely I'm feeling much better about this now. It really seems like the IRS needs to update their instructions to be clearer about the transfer process. The fact that multiple tax professionals in this thread are seeing the same confusion suggests this is a widespread issue. Thanks to everyone who shared their experiences and solutions!

This is such a timely thread! I just went through this exact scenario with my 2024 tax filing and can confirm everything that's been said here. I purchased a used EV in late 2023 and transferred the $4,000 clean vehicle credit to the dealer at the point of sale. Like the original poster, I initially tried to complete Form 8936 because I received all the official documentation from both the dealer and the IRS confirming the credit. The instructions are genuinely confusing - they talk about dealer transfers but don't clearly explain that you shouldn't file the form if you transferred the credit. What finally cleared it up for me was calling my tax preparer, who explained that the transfer process is essentially a sale of your tax benefit to the dealer. Once that transaction is complete, there's nothing for you to report on your personal return. The dealer handles all the IRS paperwork on their end. I ended up filing my return without any mention of the clean vehicle credit, and everything processed normally. The key is keeping all your documentation (dealer paperwork, IRS notices, etc.) in case there are ever any questions, but there's no need to report anything on your 1040. It's frustrating that the IRS forms and instructions haven't been updated to make this clearer, especially since the transfer option is becoming more popular. Hopefully they'll add better guidance for next tax season!

I'm a newcomer to this community but wanted to share my recent experience since it directly relates to this discussion. I just finished my 2024 tax filing after dealing with the exact same clean vehicle credit transfer confusion. Like many others here, I transferred my $4,000 credit to the dealer when I purchased my vehicle in late 2024. I received all the proper documentation and the IRS confirmation notice, but when tax season came around, I was completely lost about how to handle it on my return. After reading through this entire thread, I followed the consensus advice - I did NOT file Form 8936 and did NOT report anything related to the clean vehicle credit on my tax return. I kept all my dealer and IRS documentation for my records, but otherwise treated my return as if the credit transfer never happened (since from a tax filing perspective, it essentially didn't). My return was accepted and processed without any issues. The key insight that helped me was understanding that when you transfer the credit, you're essentially "selling" that tax benefit to the dealer in exchange for a reduced purchase price. Since the dealer claims the credit from the IRS directly, there's nothing left for you to claim or report. This thread has been incredibly valuable - it's clear that many taxpayers are facing this same confusion, and hopefully the IRS will update their forms and instructions to make the transfer process clearer for future tax seasons. Thank you to everyone who shared their experiences and expertise!