New Car Credit for 2009?

So, there's been some discussion about the "new" credit for new car purchases. I love when urban legends get mixed up with tax law. Well, I'm going to go into a little more detail to give clarity to the matter.

As part of the American Recovery and Reinvestment Act (ARRA) of 2009, taxpayers who bought a new car this year may be entitled to a special tax deduction (not credit) on their 2009 return.

Let's look into the key pointers for this deduction:

--First and foremost, the purchase must occur after Feb. 16, 2009, and before Jan. 1, 2010.
--Qualified purchases new (not used) cars, light trucks, motor homes and motorcycles.
--Sales taxes (both state and local) paid on up to $49,500 of the purchase price of qualifying vehicle is deductible.
--This deduction can be taken whether you itemize or not. Typically, sales taxes can only be deducted under Schedule A Itemized Deductions.
--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.

Hopefully, this brings clarity to the subject and helps those who are wondering about the deduction and probably will count on unnamed boxed tax software to ask them the right yes or no question so that they're eligible. Yes, a shameless plug as to why you should use a professional preparer...

Remember, your questions and comments are what will make this blog more valuable and worthwhile! If you have any further questions on this topic or any other tax related issues, please contact us at info@proctortaxprep.com or call locally at 704-385-1040, non-local callers can call 866-510-5477.

TP