Special Tax Deduction on 2009 Vehicle purchases
With 2010 models coming to dealer showrooms, its good to know that purchasing a new car, light truck, motor home or motorcycle may qualify you for a special deduction for the state and local sales and excise taxes on your 2009 income tax returns. Purchases made before January 1, 2010, may qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA).
The deduction is limited to the sales and excise taxes and similar fees paid not to exceed $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI)that is between $250,000 and $260,000 and other taxpayers with MAGI that is between $125,000 and $135,000.If you have higher incomes then you will not qualify.
The deduction can be estimated by you by using Worksheet 10 in IRS Publication 919, entitled How Do I Adjust My Withholding?
The good news is that this deduction is available to you regardless of you itemize deductions on your tax returns. If you do not itemize then you can add this additional amount to the standard deduction on 2009 tax return. Also, to take this special deductions, your must file either Form 1040 or Form 1040A. It is not available to individuals who regularly use Form 1040EZ.
The TAX TIP is to file Form 1040 or Form 1040A instead of Form 1040EZ to take advantage of this deduction.
