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You May Qualify for a Special New Vehicle Tax Deduction for State and Local Sales and Excise Taxes
Posted in Taxes
With many 2010 cars sold during 2009 with many cash rebates and incentives, it’s good to know that purchasing a new car, light truck, motor home or motorcycle that has a gross vehicle weight rating of 8,500 pounds or less, may qualify you for a special deduction for the state and local sales and excise taxes on your 2009 income tax returns.
How this Sales Tax Deduction Can Help You? – This deduction can be taken regardless of whether or not you itemize other deductions on your tax return.
Purchases made from February 17,2009 through December 31, 2009 may qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA). A qualified motor vehicle includes a passenger automobile, light truck, or motorcycle, the original use of which, begins with that purchaser, and has a gross vehicle weight rating of 8,500 pounds or less.
This special deduction is limited to sales and excise taxes and similar fees paid for vehicle purchase limited to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) from $250,000 to $260,000 and other taxpayers with MAGI ranges from $125,000 to $135,000. Unfortunately, if you income is greater than what is reflected above, then you will not qualify.
The good news, is that this deduction is available to you, regardless if you itemize deductions on your 2009 tax return. Also, to take this special deduction, your must file either Form 1040 or Form 1040A. It is not available to individuals who regularly use Form 1040EZ.
How to Report this Deduction?- If you are unable to itemize, then you can add this additional amount to the standard deduction on your 2009 tax return.Tax Tip Use Form 1040 or Form 1040A instead of Form 1040EZ to take advantage of this deduction.
This article is not intended to be legal or accounting advice. Tax laws are complex, change constantly and each situation is unique. The reader is advised to do his or her own due diligence and consult competent professionals in these areas.
Learn more about how to save taxes by getting a copy of my free EBook entitled 12 Tax Income Tax Credits and Incentives that Can Help You Reduce Taxes with Your 2009 Income Tax Return. Get your copy of the free EBook until March 15, 2010 when it goes on sale for $9.99. Sandor Lenner,CPA/MBA has provided accounting and business services for over 35 years. He is also a Certified QuickBooks ProAdvisor.
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