Sunday, May 3, 2009

Sales Tax on New Vehicle

Qualified motor vehicle taxes are deductible either as part of the standard deduction or as an itemized deduction. This means that you can take the sales tax you paid on a new vehicle even without itemizing your deductions. Qualified motor vehicle taxes are any state or local sales or excise tax imposed on the purchase of a qualified motor vehicle. The deduction is limited to the amount of taxes attributable to the first $49,500 of the purchase price.

Here is an explanation from the I.R.S.

The deduction is phased out for a taxpayer with modified adjusted gross income between $125,000 and $135,000 ($250,000 and $260,000 on a joint return). A qualified motor vehicle is:
• A new passenger automobile or light truck, or motorcycle with a gross vehicle weight rating of 8,500 pounds or less and the original use of which begins with the taxpayer, and
• A new motor home of which the original use begins with the taxpayer.

NEW means the first owner, not used and not just new to you.

In order to get this deduction you have to purchase the vehicle described above on or after February 17, 2009, and before January 1, 2010.

If you purchase a new vehicle during this period of time, be certain to save the document that shows the amount of sales tax that you paid and bring it when you come in to have your 2009 income tax return filed.

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