It's Fall: 10 Weeks Of Alternative Minimum Tax Planning Ideas...week 3 Sales Tax On New Cars Spe
If you still are thinking about buying a new car but haven't done it yet
, youd better start visiting showrooms soon. The new tax law allowing a one-time deduction for sales tax paid on a new vehicle will expire in just 6 weeks; after December 31st its too late. New car models currently are arriving in dealer showrooms, so whether you end up negotiating a good price on a leftover 2009, or are one of the first in your neighborhood to own a 2010, it makes no difference - both of them qualify.
Under the stimulus bill enacted last February, this tax benefit is separate and distinct from the cash for clunkers program; in fact, you can take advantage of both so long as you qualify under each programs requirements.
The extra good news for AMT payers is that, unlike the rule for general sales taxes, and for state income taxes and property taxes that we already have told you about, this new-car sales tax break is available even if you are stuck in the Alternative Minimum Tax!
A quick summary of the rules:
-State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
-In a state that does not have a sales tax such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon other fees or taxes are deductible so long as they are assessed on the purchase of the vehicle and are based on the vehicles sales price or as a per unit fee.
-Qualified motor vehicles include new - not used - cars, light trucks, motor homes and motorcycles.
-Purchases must have occurred after February 16, 2009, and before January 1, 2010.
-The deduction can be taken regardless of whether or not you itemize your deductions on your tax return i.e., even if you take the standard deduction you are still eligible for this one.
-The deduction is claimed on your 2009 Federal income tax return, not on your 2008 as can be the case with certain casualty losses.
-The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
If you already have bought a car that qualifies, you need to go and figure out how much this new benefit will save you if you haven't done so already.
If you're still wavering over whether to do it or not, you need to calculate the tax savings you will get - up to 28% of the sales tax paid even if you are in the AMT, and then figure this in to what you can afford. Maybe this will help you make the decision!
by: George Bauernfeind
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It's Fall: 10 Weeks Of Alternative Minimum Tax Planning Ideas...week 3 Sales Tax On New Cars Spe