While conducting our field work this tax season, it has come to our attention that many clients have installed electric vehicle charging stations. A taxpayer can claim a credit equal to 30% of the cost of a “Qualified Alternative Fuel Vehicle Refueling Property” placed in service by the taxpayer, such as an electric vehicle charging station.
The maximum credit is $30,000 for a business (at a single location) that has placed into service electric car charging stations. To claim the tax credit for Qualified Alternative Fuel Vehicle Refueling Property, the property must be used for business or investment purposes.
To claim the credit, IRS Form 8911 must be filed. If a taxpayer elects to take Section 179, “election to expense,” there is no credit available. Therefore, Downey & Company recommends that in lieu of straight expensing, or taking Section 179, taxpayers take the available tax credit. Keep in mind that credits are much more valuable than depreciation deductions as they result in a “dollar for dollar” reduction of your tax liability. Once you reduce the depreciable basis for the credit taken, you will be able to take favorable bonus and regular depreciation.
For example, a dealer installs charging stations in the amount of $20,000. The dealer will reduce his/her tax liability by the amount of the credit of $6,000. The dealer will also take bonus depreciation and regular depreciation totaling $8,400 for 2014. The remaining depreciable balance will be deducted over the next 5 years on an accelerated basis.
If you have installed electric charging stations at your store, advise your tax preparer that you want to take advantage of the credit.
If you have any questions regarding this article, please contact Paul McGovern at pmcgovern@downeycocpa.com or 800-849-6200.
