If you are in the business of selling fuels, transportation infrastructure, or use fuel, you may qualify for another benefit. In mid-January, the IRS announced that The Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended the alternative fuel vehicle refueling property credit to cover refueling property placed in service in 2021. It was also announced that electric vehicle charging stations now qualify for the Qualified Alternative Fuel Vehicle Refueling (QAFVR) credit which was extended to January 1, 2021.
This credit equates to 30 percent of the cost of placing each piece of qualifying alternative fuel vehicle refueling property into service. If you are an individual who installed and is utilizing the charging station for your own personal use, the maximum credit available is capped at 1,000 dollars. If you are a business that installed the charging station for patrons or residents, the credit limitation is capped at 30,000 dollars.
If you are a business that is looking to take advantage of this credit, it must be noted that the depreciable basis of your charging station will be reduced by the amount of credit you claim.
QAFVR Eligible Refueling Sources
The intention of the QAFVR credit is to incentivize the use of clean fuels. The legislation for this credit defines eligible refueling sources as any of the following three categories:
- Fuel containing at least 85 percent of one or more of the following:
- Natural gas
- Compressed natural gas
- Liquefied natural gas
- Liquefied petroleum gas
- Any mixture which consists of two or more of the following (as defined in section 40A(d)(1)):
- Diesel, biodiesel, or kerosene – AND –
- At least 20 percent of the volume of which consists of biodiesel determined without regard to any kerosene in such mixture
With this legislation retroactively applying to your qualifying alternative fuel vehicle refueling property that was put into service during 2018, you may see value from amending your 2018 tax return to take advantage of the higher credit limit.
At Christianson, understanding and supporting efforts towards renewable energy is one of the primary focuses of our business. Contact your tax expert today to determine what the next best steps would be for you or your business. We’re here to help.