If you plan to buy a new car this year then this couldn’t have come at a more apt time as the U.S. Treasury Department and the Internal Revenue Service announced last week that a sales tax break would be levied on new vehicles bought in the United States.
All this is attributed to the “American Recovery and Reinvestment Act of 2009″ which allows taxpayers to buy a new vehicle without paying the state /local sales/excise tax made this year.
Not only that but states that currently do not levy sales tax such as Oregon, New Hampshire, Montana, Hawaii, Delaware and Alaska qualify for the tax sops as well, says the Treasury and the IRS. What this would mean for you is that vehicles would now be cheaper in these states.
The Treasury and the IRS said that taxpayers who buy new vehicles in these states could now deduct other taxes or fees under different heads, which are enforced by the local government or the states. This tax or fee is applicable on the sales or unit price of a new vehicle. The congress had an intention to include tax headings like sales taxes and fees as a part of this tax deduction policy, said the IRS.
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IRS commissioner Doug Shulman said that the deductions are applicable on new vehicle purchases made this year, both in states with sales taxes or without it. He added that a lot more taxpayers could benefit from this act when they file for returns the next year.
Any vehicle bought post 16 February 2009 and before 1 January 2010 would qualify taxpayers for this deduction. The taxpayers can claim this deduction whilst they file for returns for the year 2009 in the next year. The tax deduction is set on a fee/tax up to $49,500 of the sales cost of a new vehicle such as a light truck, car, motorcycle or a recreational vehicle.
This deduction is not applicable for individual taxpayers or taxpayers who have a modified adjusted gross income in the range of $125,000 – $135,000 and $250,000 – $260,000 for the joint tax filers. This tax sop is applicable even if the taxpayers do not enumerate the deductions applicable on their tax returns.
However, those who do not enumerate their deductions are allowed to deduct this amount along with their standard deductions on their tax returns for the year 2009. However the IRS asserted that this deduction would not be applicable for the 2008 tax returns.
