The IRS reminds car buyers of the special sales tax deduction for car purchases under ARRA available through the end of the year
A reminder to our applicants
At AutoNet Financial, we’re in the business of helping our customers reestablish their credit by financing their vehicles with a bad credit auto loan through high risk lenders. As the borrower, one of the things you can do to aid in the process, and make it less expensive, is to take advantage of the sales and excise tax deduction available to all purchasers – including bad credit car loan buyers - of new vehicles on purchases made in 2009.
Here is the information supplied by the Internal Revenue Service:
WASHINGTON — With 2010 models arriving in dealer showrooms, the Internal Revenue Service reminds taxpayers that purchasing a new car, light truck, motor home or motorcycle could qualify them for a special deduction for the state and local sales and excise taxes on their 2009 tax returns.
Purchases made before Jan. 1, 2010, will 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 on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.
Taxpayers who make qualifying new vehicle purchases this year can estimate the deduction with the help of Worksheet 10 in IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k of the worksheet show how to take into account purchases above the $49,500 limit, as well as the reduced deductions for taxpayers at higher income levels.
The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
For those that have questions about the deduction for sales tax and other fees, a video on the IRS Youtube.com channel and audio podcasts in English and Spanish are also available to help taxpayers take full advantage of the deduction.
The Bottom Line
If you’re planning on buying your next car with a bad credit car loan, you can take advantage of the sales and excise tax deduction by buying a new car before the January 1, 2010 deadline, making your purchase even more affordable.
For more information about subprime car loans, go to our website at: www.autonetfinancial.com.
