Monday, June 22, 2009

More People Qualify for Car-Tax Deduction

There is nothing better than realizing you can save more on taxes than you had originally thought! Well that is exactly what is happening to hundreds of American taxpayers who are beginning to realize that they will benefit from the IRS’ new rules regarding car tax deductions. Check out the following story courtesy of the Wall Street Journal.

Some people who thought they weren't eligible for a new tax break might qualify after all. A law enacted earlier this year allows many taxpayers who buy new cars and other types of motor vehicles during a certain time period this year to deduct the state or local sales taxes, or excise taxes, paid on the purchase. That may sound fairly simple, but it isn't.

For example, what about taxpayers who live in states that don't impose a state sales tax?

The Treasury Department and the Internal Revenue Service recently decided that "purchases made in states without a sales tax -- such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon -- can also qualify for the deduction."

How so? Taxpayers who buy a qualified new motor vehicle in states without sales taxes "are entitled to deduct other fees or taxes imposed by the state or local government," the IRS said. The fees or taxes that qualify "must be assessed on the purchase of the vehicle and must be based on the vehicle's sales price or as a per-unit fee."

Continue reading this story here.

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