I believe the tax credit is federal. You have to declare it on your federal taxes.You should get the money back next year.
That is what I understand also. Federal level credit, and you will file for that at the end of this year.
Just to be clear about this: You two are referring to a credit on taxes that you are paying on a car purchased since the passage of the Stimulus Package bill, correct? I don't know the particulars of this, but I just don't want anyone to read this thread and mistakenly believe they could purchase a new Prius and receive a tax credit just because they purchased a Prius. Those tax credits are long gone for Toyota. They last another few hours (at full strength, that is) for Ford, and the tax credits are waiting to be claimed under GM and Chrysler models. (I think Honda has used up the tax credits through too much success, but someone could have better intel on that one.)
I could be wrong as I haven't read much on this topic... I think it is a Schedule A itemized deduction that is being allowed for sales tax on a new car purchase during aught nine. The new car sales tax can be taken in addition to state and local income tax deduction. In the past, you either deducted state and local income taxes or sales tax. Not both. A tax credit is a direct reduction from your income tax liability. A deduction is taken before income tax is calculated. I wonder how many states will adopt this tax cut. Fried Rice
The federal stimulus tax credit is a tax deduction for state sales tax. Washington State abolished the state sales tax for Prius, Insight, VW-TDI, and possibly a few other cars for 2009 and 2010. No cry-baby complaints will be accepted for missing out on the federal deal, because the state deal is much better. Under the federal plan, you get back only 0-39% of the sales tax, next year, depending on your federal bracket. But under the state plan, you keep 100% of the sales tax, right now. There is no way to double-dip. ---- Unfortunately, Senate Democrats in Olympia yesterday proposed abolishing the state deal to help with our massive budget deficit. For folks like me planning to buy later, stay tuned.
It is above the line, i.e., not itemized. From USA Today: "Purchasers of new cars and trucks will be allowed to deduct sales or excise taxes. This is an above-the-line deduction, so you don't have to itemize to claim it. The deduction is limited to sales tax on purchases of up to $49,500. The deduction phases out for single taxpayers with adjusted gross income of more than $125,000, and married taxpayers whose AGI exceeds $250,000. The amount you save will depend on your state sales tax rate and the price of your car or truck. If your state imposes a 4% sales tax and your car costs $40,000, the deduction will reduce your adjusted gross income by $1,600, says tax publisher CCH. The deduction is limited to car and truck purchases made between the date the bill becomes law and Dec. 31, says Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. Congress "is trying to get people to buy cars right away," he says."
Man I did it just in the nick of time. Bought a 2009 w/package 6 about 10 days ago (3/26). No sales tax paid! It was a $2300 savings on top of an already good deal and the $500 incentive. At least there is some down side to this crappy economy. By the way, my dealer, Lake City Toyota in Seattle, was really great. I highly recommend them. I went through their internet manager Phil
Do you have a contact name to share? This was the first place I stopped while scoping out dealers in preparation for a 2010 purchase, and the contact randomly assigned to me was lackluster. Their selection was poor at that time, only 7 units, though Edmunds.com now shows 30 units. --Dean
Special Tax Break Available for New Car Purchases This Year Special Tax Break Available for New Car Purchases This Year IR-2009-30, March 30, 2009 WASHINGTON — The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year. “For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.” The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. 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. IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.
Just wanted to highlight that part. We bought on Feb. 2, so no help there for us. We also bought our home in 2008 and we're on the short end of the stick for the home buying tax credit. (The 2008 break was a $7,500 loan.. 2009 is $8,000 that you don't have to pay back)
From Fuzzy1 from another thread: Well, the Legislature passed a budget yesterday. It seems that future 2010 Prius buyers are still safe from the state sales tax -- so far, my quick search finds no indication that the possible repeal is included in this budget, and local news is not mentioning it. But I encourage other readers to search in case I missed something. The exemption in question is RCW 82.08.813. The new State Budget is HB1244. More information about this bill is on the state's Bill Finder page. With the sales tax exemption still in effect through this and next year, I should be able to wait until the initial sales rush is over.
http://www.ofm.wa.gov/budget09/highlights/default.asp I read through highlights of budget and NO MENTION of removing the tax exemption on hybrid vehicles. The senate might meet again but probably not for a while, most are saying they will deal with other bills that did not get dealt with in December. This is the approved budget as of now though, from what I can gather. If anyone finds anything different, PLEASE POST IT HERE!! Otherwise, looks like WA state 2010 prius buyers are good to go and can hold out for what they want without risking tax cost!! WOHOOO!!!!:cheer2:
