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Help the Environment and Lower Your Taxes 
 
by kmhagen May 31, 2005

Recapture of the Credit

As in the case of the deduction for clean-fuel vehicles, the electric vehicle credit is subject to recapture if, within 3 years after the date you place the vehicle in service, it ceases to qualify for the electric vehicle credit. The vehicle ceases to qualify if it is modified so that it is no longer primarily powered by electricity.

Recapture amount

  • 100% of your credit if the electric vehicle ceases to qualify within the first full year after it was placed in service.
  • Two-thirds of your credit if it ceases to qualify within the second full year after it was placed in service.
  • One-third if it ceases to qualify within the third full year.

You report the recapture amount by adding it into the Total Tax line on Form 1040 and writing "QEVCR" on the dotted line next to that line.

Basis Adjustments

When you claim a tax credit for a qualified electric vehicle, you must reduce your basis in the vehicle by the the lesser of $4,000 or 10% of the cost of the vehicle.

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