Search
Wednesday 23 August 2017
  • :
  • :

Car Sales Tax Deduction ENDS December 31, 2013

tax savingsThe itemizing option to choose between deducting state and local income taxes or state and local sales taxes expired at the end of 2011. The American Taxpayer Relief Act renewed the deduction, extending it through 2013 and making it retroactive to the 2012 tax year.
Note: MOST OF OUR DEALERS WILL BE OPEN PART OF THE DAY ON NEW YEARS EVE. CALL TO GET THEIR SCHEDULE. SOME WILL BE OPEN ON NEW YEARS DAY AS WELL, BUT NOT ALL; so again, CALL (don’t email) to get their holiday hours.
Some folks might not have wanted to take a chance on what Congress might do. That’s usually a wise move, underscored by Representatives and Senators pushing off 2012 tax decisions until Jan. 1 of 2013.
So perhaps you waited until 2013 to buy a new vehicle so there wouldn’t be any question about the tax break. We now know that deducting sales tax on vehicle purchases will end December 31st of 2013, and will not be extended.
For our Texas and Tennessee readers, those are two of nine states with no income tax on wages or salaries, so the ability to claim sales taxes on Schedule A has been a welcome tax development. Deducting the sales tax on your new car or other major purchases is allowable.
For all other states, you can either keep all your sales receipts and use that total as your deduction claim, or you can use the optional method, in which you claim the sales tax amount that the Internal Revenue Service has calculated as the average for residents of your state.
Most folks take the easier pre-figured table route, but the tables, which are found in the Schedule A instructions, don’t take into account big ticket items that generally aren’t purchased every year. These include the purchase or lease of a vehicle (this covers not just cars, but also trucks, motorcycles or motor homes), purchase of a boat or aircraft, or purchase of a home, including a mobile or prefabricated home, or substantial renovation of a residence.
In these cases, you get to add the sales tax paid on these items to your state’s average table amount. Of course, there are a few requirements. The sales tax charges on the big-ticket items must be the same rate as the general sales tax.
The instructions for Schedule A contain a worksheet to figure your sales tax deduction when you have a major purchase to include. You’ll want to add your local sales taxes here, too.
If you use tax software, that program will take care of calculation, or you can use the IRS’ online sales tax deduction calculator.




Leave a Reply

Your email address will not be published. Required fields are marked *