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IRS Modified Adjusted Income Limitations and Disclosures
When a buyer chooses to transfer a tax credit to a dealer in exchange for a down payment at the point of sale, the dealer is not required to verify a buyer’s income. However, dealers are required to disclose information about the applicable modified adjusted gross income (AGI) limits to the buyer. Dealers are not required to repay the advance payment if the buyer exceeds the income limits. Publication 5899, Clean Vehicle Credit Transfer: Information you need to provide to the registered dealer and Publication 5900, Important Information for Consumers Transferring Clean Vehicle Tax Credits provide an overview of information that is needed from the dealer and buyer at the time of sale. The buyer must attest to the dealer that he or she expects to qualify for the credit. Buyers are not eligible for the credit if their modified AGI exceeds certain thresholds.
For new vehicle credits:
Married filing jointly or filing as a qualifying widow(er) - $300,000
Head of household - $225,000
All other taxpayers - $150,000
For used vehicle credits:
Married filing jointly or filing as a qualifying widow(er) - $150,000
Head of household - $112,500
All other taxpayers - $75,000
If the buyer’s modified AGI exceeds the limitation or is otherwise ineligible, the buyer will be required to repay the IRS the amount received for transferring the tax credit when the buyer files their tax return. IRS Energy Credits Online prompts the buyer with “Buyer Terms of Agreement” which shares many of the items described above, including information regarding modified AGI limitations. This section includes checkboxes confirming disclosures occurred and provides for an e-signature.
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