If you are deciding whether or not to invest in a vehicle for your business, you should consider the tax implications.

New Qualified Plug-in Electric Credit

U.S. Code § 30D allows for a tax credit for plug-in electric vehicles drawing propulsion energy from a battery with five kilowatt hours or more of capacity. The credit amount is $7,500, which can be used to directly offset tax liability. The credit is nonrefundable but is not subject to AGI limitations. The credit is available to both personal and business use purchases.

American Opportunity Tax Credit

U.S. Code Title 26 § 25A allows for a tax credit for qualified education expenses paid for an eligible student for the first four years of the taxpayer, spouse or dependent’s higher education. The maximum annual credit is $2,500 per student, which is can be used to directly offset the taxpayer’s tax liability. If the credit pays the taxpayer’s tax to zero, 40 percent of the remaining credit (not to exceed $1,000) is refundable. The credit is reduced at a MAGI (modified adjusted gross income) of $80,000 ($160,000 for married filing jointly) and excluded for taxpayers with a MAGI of $90,000 ($180,000 for married filing jointly).

Eligibility for credit is contingent with the following requirements:

  1. Recognized education credential is being pursued
  2. Enrolled at least half time for at least one academic period
  3. Not finished first four years of higher education
  4. Not claimed AOTC for more than four tax years
  5. Never convicted of a drug felony

Lifetime Learning Credit

U.S. Code Title 26 § 25A also allows for a tax credit for qualified education expenses paid for an eligible student which is not subject to the first four years of higher education of the AOTC. This credit can be used for year five and up of an undergraduate degree, as well as, graduate and professional degree courses. There is no limit to the number of years a taxpayer can take the credit and a maximum of $2,000 in nonrefundable after-tax benefit can be claimed. The credit is reduced at a MAGI (modified adjusted gross income) of $56,000 ($112,000 for married filing jointly) and excluded for taxpayers with a MAGI of $66,000 ($132,000 for married filing jointly).

By: Kyle Watwood, Staff Accountant, Onisko & Scholz