IRS Announces Special Tax Break for New Car Purchases in 2009

Quidproquo · 04-01-2009, 10:24 PM

The IRS has announced that taxpayers who buy a new passenger vehicle in 2009 may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers with modified adjusted gross income between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. The deduction is available for vehicles purchased after February 16, 2009, and before January 1, 2010, and may be claimed regardless of whether taxpayers itemize deductions on their returns. Taxpayers may not take this special deduction on their 2008 tax returns.

MightyBobo · 04-01-2009, 10:42 PM

Quote:

Originally Posted by Quidproquo

The IRS has announced that taxpayers who buy a new passenger vehicle in 2009 may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers with modified adjusted gross income between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. The deduction is available for vehicles purchased after February 16, 2009, and before January 1, 2010, and may be claimed regardless of whether taxpayers itemize deductions on their returns. Taxpayers may not take this special deduction on their 2008 tax returns.

God I cant wait to do taxes next year...Im sure a bulk of my mods will come from that hahaha. This was one of my reasons for making sure to get the car this year.

MC · 04-01-2009, 11:16 PM

is this the $7500 i heard about on the news?

MightyBobo · 04-01-2009, 11:32 PM

Quote:

Originally Posted by MC@MYGTR

is this the $7500 i heard about on the news?

$7500? I heard the average person will get $1500 back on a $25000 car.

MC · 04-01-2009, 11:40 PM

oh ok. yeah that seemed to good to be true. maybe it was on a mortgage or something

MightyBobo · 04-01-2009, 11:57 PM

Quote:

Originally Posted by MC@MYGTR

oh ok. yeah that seemed to good to be true. maybe it was on a mortgage or something

Thats much more likely heh.

Anatoray · 04-02-2009, 12:07 AM

yeah, i can't wait until next year's tax season already lol.

Pushing_Tin · 04-02-2009, 12:39 AM

That's lame, if it's for 2009 why did they start it in February and not on Jan 1?

SoCal 370Z · 04-02-2009, 01:57 AM

Quote:

Originally Posted by Quidproquo

...of the purchase price of a qualified new car, light truck, motor home or motorcycle

Herein lies the caveat...qualified.

Minicobra1 · 04-02-2009, 03:58 AM

Yeah, what does qualified mean? why start in Feb 16th 2009, I got mine on Jan 5th I'm sure my $40K purchase is helping to stimulate the economy and car market just as much as the next guy.

MightyBobo · 04-02-2009, 08:10 AM

Quote:

Originally Posted by SoCal 370Z

Herein lies the caveat...qualified.

As far as I knew it was any new car. But, I guess we'll find out if its American-built only ones :-p

Quidproquo · 04-02-2009, 09:07 AM

Here's a little more elaborate article from Kiplingers:

Deduct the Sales Tax Paid on a New Car
If you buy a new car, pickup truck, motorcycle or motor home this year you could qualify for a new sales tax deduction, thanks to the stimulus law passed on February 17, 2009.

You can deduct the sales tax you pay on a new vehicle, if you buy it between February 17 and December 31, 2009. And you get this tax break even if you claim the standard deduction—as most taxpayers do—rather than itemizing deductions on your tax return.

For people who take the standard deduction on their 2009 returns next spring, the sales tax deduction will be added to their standard deduction. For example, the standard deduction for married couples for 2009 is $11,400. If a couple pays 6 percent sales tax on a $30,000 car, they can add the $1,800 sales tax to the $11,400 and claim a standard deduction of $13,200. That $1,800 deduction could be worth as much as $450 in tax savings for a car buyer who’s in the 25 percent tax bracket.

Taxpayers who itemize deductions will include their vehicle sales taxes with other qualifying expenses, such as state and local income and property taxes, mortgage interest, charitable contributions and medical expenses.

One group of taxpayers won't benefit from the new break
Itemizers who choose to deduct state and local sales taxes instead of state and local income taxes already get to deduct the sales tax paid on vehicles. The new rule does not mean they get a double deduction. The sales tax deduction choice is usually made by residents of states that charge sales taxes, but don’t impose broad-based income taxes: Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.

The new deduction for sales taxes on a new car does not affect the 2008 tax return you’re working on now. It applies for 2009 purchases only and will save you money when you file your 2009 return in 2010.

Deduction has limits on vehicle weight and taxpayer income
This deduction only applies to sales taxes paid on new cars and trucks—not used ones—that weigh less than 8,500 pounds, plus motorcycles and motor homes. If you buy a vehicle for more than $49,500, you can only deduct the sales tax on that amount.

One more restriction: If you make “too much” money, you don’t get this new break. Congress says the deduction is phased out for single taxpayers with Adjusted Gross Income (AGI) between $125,000 and $135,000, and between $250,000 and $260,000 for married couples who file joint returns. If your AGI is halfway through the phase-out zone, for example, your sales tax deduction would be cut in half. For most taxpayers, AGI is basically taxable income before subtracting personal and dependent exemptions, and standard or itemized deductions.

As is often the case with tax legislation, some issues about the new deduction are unclear. For example, can a husband and wife each deduct sales tax on vehicles that cost up to $49,500 or is that the limit for a couple filing a joint return? And what if you buy two $20,000 cars? Can you deduct the sales tax on both of them, or is the deduction limited to a single vehicle?

We should know the answers well in advance of January, when the deduction will show up on tax returns for the first time.

MightyBobo · 04-02-2009, 01:29 PM

Good find, Quid.

arcticreaver · 04-02-2009, 02:30 PM

this is BS. i got my ride on feb 1st. they should have been made it like from jan 09 - dec 09.

04-01-2009, 10:24 PM	#1 (permalink)
Quidproquo Base Member Join Date: Nov 2008 Location: Morris County, NJ Posts: 69 Drives: 2007 350Z CS 6M Rep Power: 16	IRS Announces Special Tax Break for New Car Purchases in 2009 The IRS has announced that taxpayers who buy a new passenger vehicle in 2009 may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers with modified adjusted gross income between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. The deduction is available for vehicles purchased after February 16, 2009, and before January 1, 2010, and may be claimed regardless of whether taxpayers itemize deductions on their returns. Taxpayers may not take this special deduction on their 2008 tax returns.

04-02-2009, 03:58 AM	#10 (permalink)
Minicobra1 A True Z Fanatic Join Date: Nov 2008 Location: Orange County, CA. Posts: 1,205 Drives: 370Z Tour, Spt, 6mt Rep Power: 644	Yeah, what does qualified mean? why start in Feb 16th 2009, I got mine on Jan 5th I'm sure my $40K purchase is helping to stimulate the economy and car market just as much as the next guy. __________________ 370z Tour\| Spt Pack\|Navi\|BERK CBE\|Berk HFC's\| Eibach Springs\| Hotchkis Sway Bars\|SPC Camber Arms\|15mm Ichiba Wheel Spacers\| 19"Factory Nismo Wheels-Matt Black\|Stop Tech Rotors\|TWM Shifter\|3M Tint\|Black Fangs\|Black Rear Valance\|JDM Fog Light\| MY BAND-www.myspace.com/petroleum

04-02-2009, 01:29 PM	#13 (permalink)
MightyBobo A True Z Fanatic Join Date: Feb 2009 Location: Las Vegas, NV Posts: 8,465 Drives: No cars; only bikes Rep Power: 52	Good find, Quid. __________________ I don't own a car anymore.

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04-01-2009, 11:16 PM	#3 (permalink)
MC Moderator Join Date: Oct 2008 Location: NC Posts: 3,238 Drives: 2015 GTR NISMO Rep Power: 23	is this the $7500 i heard about on the news?

04-01-2009, 11:40 PM	#5 (permalink)
MC Moderator Join Date: Oct 2008 Location: NC Posts: 3,238 Drives: 2015 GTR NISMO Rep Power: 23	oh ok. yeah that seemed to good to be true. maybe it was on a mortgage or something

04-02-2009, 12:07 AM	#7 (permalink)
Anatoray Track Member Join Date: Mar 2009 Location: Kentucky Posts: 794 Drives: 09 BLK 370Z Rep Power: 17	yeah, i can't wait until next year's tax season already lol.

04-02-2009, 12:39 AM	#8 (permalink)
Pushing_Tin A True Z Fanatic Join Date: Nov 2008 Location: Eugene, OR Posts: 2,875 Drives: E63 AMG Rep Power: 227	That's lame, if it's for 2009 why did they start it in February and not on Jan 1?

04-02-2009, 09:07 AM	#12 (permalink)
Quidproquo Base Member Join Date: Nov 2008 Location: Morris County, NJ Posts: 69 Drives: 2007 350Z CS 6M Rep Power: 16	Here's a little more elaborate article from Kiplingers: Deduct the Sales Tax Paid on a New Car If you buy a new car, pickup truck, motorcycle or motor home this year you could qualify for a new sales tax deduction, thanks to the stimulus law passed on February 17, 2009. You can deduct the sales tax you pay on a new vehicle, if you buy it between February 17 and December 31, 2009. And you get this tax break even if you claim the standard deduction—as most taxpayers do—rather than itemizing deductions on your tax return. For people who take the standard deduction on their 2009 returns next spring, the sales tax deduction will be added to their standard deduction. For example, the standard deduction for married couples for 2009 is $11,400. If a couple pays 6 percent sales tax on a $30,000 car, they can add the $1,800 sales tax to the $11,400 and claim a standard deduction of $13,200. That $1,800 deduction could be worth as much as $450 in tax savings for a car buyer who’s in the 25 percent tax bracket. Taxpayers who itemize deductions will include their vehicle sales taxes with other qualifying expenses, such as state and local income and property taxes, mortgage interest, charitable contributions and medical expenses. One group of taxpayers won't benefit from the new break Itemizers who choose to deduct state and local sales taxes instead of state and local income taxes already get to deduct the sales tax paid on vehicles. The new rule does not mean they get a double deduction. The sales tax deduction choice is usually made by residents of states that charge sales taxes, but don’t impose broad-based income taxes: Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. The new deduction for sales taxes on a new car does not affect the 2008 tax return you’re working on now. It applies for 2009 purchases only and will save you money when you file your 2009 return in 2010. Deduction has limits on vehicle weight and taxpayer income This deduction only applies to sales taxes paid on new cars and trucks—not used ones—that weigh less than 8,500 pounds, plus motorcycles and motor homes. If you buy a vehicle for more than $49,500, you can only deduct the sales tax on that amount. One more restriction: If you make “too much” money, you don’t get this new break. Congress says the deduction is phased out for single taxpayers with Adjusted Gross Income (AGI) between $125,000 and $135,000, and between $250,000 and $260,000 for married couples who file joint returns. If your AGI is halfway through the phase-out zone, for example, your sales tax deduction would be cut in half. For most taxpayers, AGI is basically taxable income before subtracting personal and dependent exemptions, and standard or itemized deductions. As is often the case with tax legislation, some issues about the new deduction are unclear. For example, can a husband and wife each deduct sales tax on vehicles that cost up to $49,500 or is that the limit for a couple filing a joint return? And what if you buy two $20,000 cars? Can you deduct the sales tax on both of them, or is the deduction limited to a single vehicle? We should know the answers well in advance of January, when the deduction will show up on tax returns for the first time.

04-02-2009, 02:30 PM	#14 (permalink)
arcticreaver Track Member Join Date: Feb 2009 Location: Arcadia, CA Posts: 769 Drives: 2009 Z34 7AT PG Rep Power: 924	this is BS. i got my ride on feb 1st. they should have been made it like from jan 09 - dec 09.