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45W Tax credit

What is the 45W Tax Credit?

Section 45W of the Internal Revenue Code provides a tax credit for organizations purchasing qualified commercial clean vehicles, including electric, hydrogen, and plug-in hybrid electric vehicles. It aims to promote clean transportation and reduce greenhouse gas emissions.

What is Covered in the 45W Tax Credit
 

The credit applies to commercial clean vehicles, such as:

  • Electric Vehicles (EVs).
  • Plug-in Hybrid Electric Vehicles (PHEVs).
  • Hydrogen Fuel Cell Vehicles.

How to Qualify for the 45W Tax Credit?

  • Business Use: The vehicle must be used for organization purposes, not for resale.
  • Depreciation: The vehicle must be subject to depreciation in the business.
  • Manufacturer Requirements: The vehicle must be made by an IRS-qualified manufacturer and comply with Clean Air Act standards.
  • Propulsion Requirements: EVs must have a battery capacity of:
    • At least 7 kWh for vehicles with a GVWR of less than 14,000 pounds.
    • At least 15 kWh for vehicles with a GVWR of 14,000 pounds or more.

How Much Can You Receive from the 45W Tax Credit?

The amount you can receive from the 45W tax credit for qualified commercial clean vehicles depends on several factors, including the vehicle’s weight, propulsion system, and the incremental cost compared to a similar internal combustion engine vehicle. Here’s a detailed breakdown:

Credit Amount Calculation

  • Maximum Credit:
    • Up to $7,500 for vehicles under 14,000 pounds GVWR.
    • Up to $40,000 for vehicles over 14,000 pounds GVWR.
  • Percentage of Basis:
    • Up to $7,500 for vehicles under 14,000 pounds GVWR.
    • Up to $40,000 for vehicles over 14,000 pounds GVWR.
  • Incremental Cost Limitation: The credit is limited to the incremental cost over the price of a comparable gasoline or diesel vehicle.

How to Claim the 45W Credit

  • Form 8936: You will need to file Form 8936, “Qualified Plug-in Electric Drive Motor Vehicle Credit,” to claim the credit.
  • Documentation: Keep all necessary documentation, including purchase receipts and manufacturer certification, to substantiate your claim.

Why Choose Giraffe Financial for Your 45W Tax Credit Needs?

Giraffe Financial is your turnkey solution for maximizing the benefits of the 45W tax credit. Our expert team simplifies the process, ensuring you receive your tax credits efficiently and with ease. Here’s how we can help:

Giraffe Makes the Process Simple

  • Seamless Tax Credit: We guide you through the entire process, ensuring you obtain your tax credits effortlessly.
  • Thorough Education: Our team provides in-depth education on the 30C tax credit, ensuring you understand all aspects and requirements.
  • Simplify the Process: We streamline the process, making it straightforward and stress-free for you.

If you need more specific information or further assistance, feel free to ask. Partner with Giraffe Financial to optimize your 45W tax credit benefits with ease and confidence

Why Choose Giraffe Financial for Your IRA Tax Credit Needs?

**Giraffe Is Like Hitting the ‘Easy-Button’ to get your tax credits**

Giraffe Financial provides a full-service solution for taking advantage of the 30C tax credit. Giraffe simplifies the process while ensuring eligible tax credits are maximized and taken advantage of. Here’s how we help:

  • Eligibility: Giraffe will confirm your project site is eligible for the tax credit depending on when the system is placed in service, when costs were incurred, and which census tract it’s in (the DOE map isn’t reliable, but we will cross reference the latest IRS rulemaking). Giraffe knows all the nuances of eligibility and can help you understand if you qualify for any exceptions that might enable you to qualify as eligible.
  • Prevailing Wage and Apprenticeship (PWA): To maximize the value of your tax credits, it’s paramount to ensure that the installation of the equipment is done adhering to IRS regulations regarding PWA. Giraffe will work with you and your installer to clarify the rules so that everyone understands and so that contracts are adapted to embed appropriate legal language that requires the collection of documentation needed to substantiate PWA claims and capture the full 30% tax credit.
  • Tax Credit Calculations: Giraffe and our team of CPAs  will work with you to collect all cost data you have, review it to determine eligibility for tax credits, and optimally calculate your tax credit. We’re experts at coaching you to understand how the tax basis that credits are calculated off are calculated, and we’ll ensure you get the most credit possible based on inclusion of all relevant costs.
  • Compliance and Recordkeeping: Giraffe workflows guide clients through submission of all supporting documentation through our secure online portal. We review all information provided including proof of ownership, relevant permits, invoices, payroll and apprentice records etc. We use this documentation to build an audit-memo for you and maintain records on your behalf via your online account.
  • Pre-filing Registration: If you plan on pursuing the Direct Pay or Transfer provisions under the IRA, then at least 120 days prior to submitting your annual tax return you must submit a pre-filing registration to the IRS. You can do so yourself following this 73 page Pre-filing User Guide, or, by working with Giraffe we will create an account and manage the entire pre-filing process on your behalf.
  • Transfers: If you want to transfer your tax credits for cash then Giraffe will manage the entire process for you. We’ll aggregate your credits with others to attract better pricing via economies of scale, we’ll market your credits to find a buyer that will pay the best price, prepare a data room ensuring you have all desired documentation appropriately organized, provide all required legal documentation and coach you through the process, and critically we’ll structure insurance for your projects so that buyers will be willing to purchase them. Note that other tax credit transfer marketplaces simply broker the transaction by matching sellers with buyers whereas Giraffe manages the entire process on your behalf of structuring, negotiating, and insuring the credits.