New Car Buyer's Deduction

Youve probably noticed lots of good deals on new cars these days.

Even the federal government has a special offer.

Buy a new car between February 16th and December 31st of 2009, and youll probably get to deduct the cars sales tax on your tax return. The same deal applies if you buy a small truck -- or a not-so small SUV or motor home . a even a motorcycle.

Heres how it works:

Lets say you buy a car for $28,000 about the national average price for new cars. If you pay 6 percent sales tax, thats $1,680. And that $1,680 can be written off on your tax return.

So whats that worth?

Most middle-class folks would save between $250 and $420.

Remember:

You must buy a new car, used cars dont count

Higher-income taxpayers wont qualify, but a married couple can earn more than a quarter of a million dollars before having to worry about losing this break.

You can take the deduction even if you file a simple tax return and claim the standard deduction.

You can spend as much as you want, but you only get to deduct the tax on the first $49,500 of the purchase price of each new car you buy this year.

And, finally, if you normally itemize and deduct sales taxes instead of state income taxes, this new deduction doesnt give you anything extra.

The tax write off isnt enough to send people scurrying to a dealership to buy a new car.

But it certainly can make a good deal even better.

Category:

Education

Tags:

• cars
• kiplinger
• personal
• finance
• magazine
• taxes
• auto
• julio negron
• write off
• deduct
• return
• itemize

[Winterland68]

No doubt - retarded. Hmmm - I can save $250 by going into debt $28000. I'll see you guys at the car lot!

[catchersmitt0]

So if I buy a new car for 28K and subtract the value of the write-off say $420, I buy a new car for 27580. Or I can buy a cheaper or used car for say $15,000 (and get jiggy with reduce-reuse-recycle concepts), and just keep the 12,580 for about 10 mortgage payments which are even better to deduct. Gosh this is hard...

[vannibby]

lovely... (: