Did You Purchase a New Car This Year? – Here Are Some Facts about the New Vehicle Sales and Excise Tax Deduction
[Stacie says: Here are some great tips from the IRS if you purchased a new car this year.]
Taxpayers who buy new motor vehicles this year may be entitled to a special tax deduction for the sales or excise taxes on those purchases when they file their 2009 federal tax returns next year. This tax break is part of the American Recovery and Reinvestment Act of 2009.
Taxpayers in states that do not have state sales taxes may be entitled to deduct other fees or taxes imposed by the state or local government.
Here are nine important facts the IRS wants you to know about the deduction.
State and local sales and excise taxes paid on up to $49,500 of the purchase price of each qualifying vehicle are deductible.
Qualified motor vehicles generally include new cars, light trucks, motor homes and motorcycles.
To qualify for the deduction, the new cars, light trucks and motorcycles must weigh 8,500 pounds or less. Motor homes are not subject to the weight limit.
Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
Taxpayers who purchase new motor vehicles in states that do not have state sales taxes may be entitled to deduct other fees or taxes assessed on the purchase of those vehicles. Fees or taxes that qualify must be based on the vehicles’ sales price or as a per unit fee. These states include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.
Taxpayers who purchase qualified motor vehicles may claim the deduction when they file their 2009 tax return in 2010.
The deduction may not be taken on 2008 tax returns.
This deduction can be taken regardless of whether the buyers itemize their deductions or choose the standard deduction.Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
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.
For more information on this and other key tax provisions of the Recovery Act visit the official IRS Website at IRS.gov.
Links:
Sales Tax Deduction for Vehicle Purchases
YouTube Video: Vehicle Tax Deduction
Audio File for Podcast – ARRA Vehicle Tax Deduction: English Spanish
The American Recovery and Reinvestment Act of 2009: Information Center
Do You Suffer From Late Filing Syndrome – Busy Season Rerun
By Stacie Clifford Kitts, CPA
I just love this story – so I am posting again as part of my busy season reruns.
Can’t seem to file your tax returns on time? Do you have an aversion to paperwork?
Well – you’re not alone. You could be suffering from a controversial syndrome which makes it difficult for you to face the ordeal of completing your tax return.
Still not sure? Take a look at the additional following criteria. Does this sound like you?
Are you sophisticated, both financially and with respect to taxes?
Is the ultimate discovery of your failure to file obvious to you?
Are the potential penalties, financial and professional, clear to you?
Do you acknowledge that penalties will likely occur?
Is there no clear benefit to not filing because there is no significant tax due, or you have the money to cover the tax liability, or you can easily barrow the money to cover the liability?
Do you have a history of filing in the past?
Do you file extensions and pay estimated tax payments?
Are you anxious and obsessed about not filing?
Do you exhibit self destructive behavior by waiting to file your returns until the IRS is upon you?
If this sounds like you, you may be exhibiting symptoms of “Late-Filing Syndrome.”
According to tax lawyer Richard S. Kestenbaum, Late-Filing Syndrome is the reason that five years of tax returns amounting to approximately $300,000 of tax liability, penalties, and interest were not filed by New York Governor chief of staff Charles O’Byrne.
The New York Times reported that “late-filing syndrome, sometimes known as non-filing syndrome or failure-to-file syndrome, in not listed in the Diagnostic and Statistical Manual of Mental Disorders.” However, according to the Times, “legal experts said that it is not uncommon for tax evaders to claim they suffer from such a syndrome, because it can shield them from criminal penalties.” This is true because the IRS must prove that a tax payer willfully intended to evade paying income taxes.
I must admit, an aversion to filling out paperwork is something I certainly can relate to – especially around April 15.
Absent further evidence, this syndrome appears to be a creative and possibly effective attempt by attorneys to protect their clients from criminal prosecution.
