Categorized | Economy

New Car Tax Credit

After the good news for new home purchasers there’s another good news by IRS. Internal Revenue Service has declared that taxpayers who purchase a new passenger motor vehicle this year (2009) will be able to deduct State and Local sales and excise taxes that they pay on the purchase on their 2009 tax returns in the following year.

So in case you were looking to buy a car and had it in your mind that you can only afford a second hand used car, well now you have the incentive to buy a brand new flashing vehicle for your own and family’s need and it wouldn’t cost you as much as it was going to earlier.

Perhaps this is governments way of giving a boost to the embattled car makers and propping them up. Personally, I don’t see anything wrong. When the companies are doing unwell, all help is desired. But at the same time when the companies are making record profits, they shouldn’t shy off from paying some extra dollars to the government which can again be ploughed back into the community for its own good.

Car tax Credit & Deduction Qualifications and Limitations

Keep in mind that the deduction is available only on state and local sales taxes and levies. The upper amount limit on the purchase of the car is $49,500 for a brand new car, truck, motor home or motorcycle.

The deduction amount is phased out for taxpayers whose adjusted gross income is more than $125,000 dollars for individuals and more than $250,000 for joint filers.

Car tax Credit & Deduction Qualification Dates

To qualify for the Tax Credit and Deduction, you must have had purchase the vehicle after Feb 16, 2009 and before the end of this year (2009).

Also be careful that you take this deduction on the following years tax return and not on 2008 return. The IRS will not be happy if you do that.

Enjoy your new car.

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