Any Special Paperwork For Tax Credit?

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11-07-2009, 03:34 PM

#11

John Thacker

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Quote:

Originally Posted by Hobbes

You deduct the state sales tax you paid on the car off of your federal return.

I'm fairly sure you do not need to itemize your deductions to get this credit.

Correct, you don't need to itemize.

You deduct state and local sales tax. The IRS has special rules for states that have no state sales tax on cars (I believe that in general it's going to let them deduct the registration fees).

You can only deduct sales tax up to that paid on the first $49.5k of the car's value.

There are income limits to the deduction. If you make over a certain amount, no deduction for you. Singles with MAGI over $125k, married joint filers with MAGI over $250k.

IRS FAQ here.