Tax Deduct

$2.000 dollars

 

It was going to be reduced this year to $1500, but congress reinstated the $2000 deduction (not credit).

 

Don't forget to check for a state deduction or credit. Here in Colorado there's a credit. Don't know about California, but it's probably worth your time to check.

Congrats on the new car!

 

Re: Hybrid Fed.Tax Credit is still $2,000 for 2004 and 2005!

Sources:
http://www.irs.ustreas.gov/newsroom/articl...130146,00.html:
2005 Toyota Prius Certified for Clean-Fuel Deduction;
New Law Restores Full Deduction Amount for 2004 and 2005

also at: http://www.irs.gov/newsroom/article/0,,id=...=130215,00.html

Clean Fuel Vehicle Deduction — The maximum amount of this deduction was scheduled to drop this year and next, but has been retained at the $2,000 level through 2005. IR-2004-125 has information on this deduction and the newest vehicle to qualify for it.

 

Does anyone out there know if there are any tax credits or state tax advantages for New Jersey?

 

Does anyone know if there is a state tax deduction for Ohio for new hybrids purchased in calendar 2004?

 

Filers in states without income taxes can deduct sales tax, so that is an additional help (won't say incentive, as it would apply to any car purchase).

 

Remember that we are talking TAX DEDUCTION, not tax credit.

My accountant screwed up (he admitted it) and filed my returns showing a credit. He then had me file an ammended return.

And then my problems with the IRS started. It even admitted (by phone ... no paper trail) it had made a mistake. As a consequence my estimated tax payments ended up going to the wrong year (in spite of the tax voucher that went with each check). And then they kept sending me refunds that I promptly sent back (after making copies)

They are still working on it.

 

<div class='quotetop'>QUOTE(DanMan32\";p=\"53409)</div>

Actually, even filers in states WITH an income tax can choose to take the sales tax deduction if it is more advantageous to them. For example, retirees with pension income that is largely exempted from state tax in some states might find themselves better off by claiming a sales tax deduction rather than a state income tax deduction. Also, the IRS will be publishing tables of the amounts you can deduct for sales taxes based on income in case you can't actually produce all of your sales tax receipts. If you buy a car, you can deduct both the table amount AND the sales tax on the car.

 

Sales taxes have not been tax deductible on the federal return for over 10 years. Regardless of what you buy. (Unless you are a business)

Automobile property taxes are usually tax deductible as long as your state words it correctly as to what the tax actually is. If they call it an excise tax, it's not deductible.

You can go here and get answers:
http://www.irs.gov/faqs/faq-kw118.html

State income taxes are currently still deductible but there is talk that this will disapear next year.

Us commoners gotta subsidize those tax cuts somehow.

 

<div class='quotetop'>QUOTE(prius04\";p=\"56619)</div>

True, but Congress recently passed legislation that makes sales taxes deductible beginning with tax year 2004. Here's the text from the IRS web site:

Sales Tax Deduction — Taxpayers who itemize deductions will have a choice of claiming a state and local tax deduction for either sales or income taxes on their 2004 and 2005 returns. The IRS will provide optional tables for use in determining the deduction amount, relieving taxpayers of the need to save receipts throughout the year. Sales taxes paid on motor vehicles and boats may be added to the table amount, but only up to the amount paid at the general sales tax rate. Taxpayers will check a box on Schedule A, Itemized Deductions, to indicate whether their deduction is for sales or income taxes.

For more info on new tax provisions that might affect you, go to this link:
2004 Tax Law Changes

 

Sorry. I didn't realize that this had already passed. I thought it was still in the talking stage.

I suspect though that it will be the very rare case that taking the sales tax deduction will beat out taking the income tax deduction. So this really probably will just apply to those states and cities that don't have income tax systems. Like danman said.

 

2000 DEDUCTION for hybrids reinstated at least a month ago for tax year 2004 and 2005.

Sales tax deduction option was a few weeks to a month ago.

 

I suspect that will be the case, generally. Major purchases, however, will skew those results.

For example, a taxpayer who buys a new, loaded Prius in Cook County, IL will need over $75k in taxable income before state income tax exceeds the sales tax paid on the car.

 

IRS has released Pub 600 which deals with the optional sales tax deduction. From my initial reading of the pub, sales tax paid on motor vehicles, aircraft, boats, homes and/or home building materials can be added to the deduction taken for sales tax based on income. The pub contains the tables to use to calculate the deduction if you did not save all your receipts so you could add up the sales tax. If the sales tax rate on those items is higher than the general sales tax rate, your deduction is limited to the sales tax you would have paid at the general sales tax rate.

 

It says right at the bottom of page 2 on the PUB 600 form that you cannot deduct state sales taxes if you deduct state or local income taxes. It's one or the other.


As for what table to use, I agree with cmympg. You can use the "general" tables to arrive at your tax rate based upon your income, then you can add to that a major purchase like an automobile, boat, motorhome, etc. In other words, you don't need all your receipts for every single purchase you made during the year. Of course, if you have them and can show you paid more sales taxes than is in the schedules, you can use them.