question.jpgIn Federal Income Tax

What is the qualified electric vehicle credit?

If you purchased a qualified electric vehicle in 2006, you may be able to claim a tax credit for that vehicle on your 2006 tax return. To qualify for this credit, the vehicle must meet the following requirements: (i) it must be powered primarily by an electric motor; (ii) it must have at least four wheels and be intended for road use; (iii) it must have been purchased for your own use, and used by you; (iv) it must have been used predominately in the United State; and (v) it must not have previously been a nonelectric vehicle (i.e., you can’t convert a vehicle and claim the credit).

If you purchased such a car, for the 2006 tax year you can generally claim a credit equal to 10% of the cost of the vehicle, up to a maximum of $1,000 per vehicle. You can calculate and claim this credit on Form 8834, which should then be attached to your tax return.

Finally, the qualified electric vehicle credit is not refundable. This means that if your credit exceeds the amount of your tax liability, you are not entitled to get the difference returned to you.