Just because you missed out on Cash-for-Clunkers, that doesn’t mean that you can’t get any government cash of your car. tax credits and deductions can still be claimed on new cars purchased before December 31 according to the Associated Press. Though the cash reward is hardly comparable to that of the ‘Clunkers” program, but it will help increase your bottom line by either lowering your tax bill or boosting your refund.
There are two major tax deductions to be claimed, and to bear in mind when shopping; sales tax deduction and hybrid vehicle credit.
All cars buyers are eligible to deduct the sales tax of their vehicles, under the federal stimulus which provides for a deduction on any new car purchased between February 17 and year’s end. Arthur Bloom, a tax partner at Marks, Paneth & Shron in New York City told the Associated Press “I don’t know if that’s enough for somebody to say, ‘OK I’m going to go spend $30,000,'””¦”But it certainly reduces the cost of acquiring a car.”. Bloom estimates that for someone in the 25% tax bracket who purchases a car in New York with its 8.5% sales tax, the total savings would amount to about $635.
The deduction does begin to lessen for those individuals who earn $125,000 per year and disappears altogether of those who earn $135,000. The deduction is also limited to the first $49,500 of the purchase price of the vehicle.
Hybrid vehicle purchases also qualify for an additional tax credit. A credit of between $1550 and $2200 is available for certain 2009 Chrysler, Dodge, Mazda, and Saturn hybrids. Credits between $650 and $2350 are available for certain 2010 SUV’s and trucks made by Ford, Mercury, Chevy, GMC, and Cadillac, and for specific sends from Nissan and Chevy. A complete list can be found at irs.gov.
There are also credits available for certain cars with traditional or diesel engines designed of refuel efficiency. That list is also available on the IRS website.
– By Stephen Calogera