A tax credit is allowed to be taken on your client's tax return if they have purchased a qualified electric vehicle and put it in service during the tax year. The electric car must meet the following criteria in order to be considered qualified and eligible to be used for a tax credit:
If the vehicle meets the above requirements, the credit that can be taken is for 10% of the cost of the vehicle up to the $4,000 limit. The credit may be claimed on IRS Form 8834, Qualified Electrical Vehicle Credit and must be attached to your client's Form 1040 when their tax return is submitted.
Should your client's qualified vehicle be modified in any way that affects the requirement standards for this deduction within three years of the date you placed the vehicle in service, the credit taken may be subject to recapture by the IRS.