A novel iridium based, water-soluble phosphine-NHC (N-heterocyclic carbene) complex, Na2[Ir( emim)(η4-COD)( mtppts)] was previously developed in our research group. It was shown that it is a very effective catalyst for the reversible storage of hydrogen based on the formate-bicarbonate equilibrium. In this paper, we present a DFT investigation on the noninnocent behavior of the NHC ligand toward C-H activation of the N-ethyl side chain and its possible role in the hydrogen storage mechanism. After preliminary investigations, using both computations and NMR measurements, we conclude that the COD ligand leaves the precatalyst irreversibly and the C-H activation takes place on a monophosphine complex. Two main pathways are considered in which the active Ir(III) complexes are generated differently: One is the cyclometalation path involving the ethyl side chain, the other is the oxidative addition step of a water molecule which has a higher barrier but provide a more stable starting state. We find that though the latter, a catalytic cycle where a hydride is abstracted from formate and gets protonated by solvent molecules gives the lowest calculated energy barrier, +25.8 kcal mol-1. That is, avoiding further redox processes is preferred. There are other pathways involving thermodynamically accessible C-H activated iridacycles but those involve slightly higher overall activation barriers due to the required Ir(I)/Ir(III) transitions. The cycle which involves only iridacycle intermediates offer the lowest energy span (energy difference calculated between only the highest and lowest energy points inside the cycle), however. Together with the experimental results, this implies that C-H activation of the N-ethyl side chain happens off-cycle or the starting solvent addition step of the dominant pathway is blocked kinetically. We also discuss the hydrogen uptake reaction catalyzed by cyclometalated species where the reduction of CO2 is preferred over reversing the first main cycle.