TurboTax tells me that if I bought a car in 2009 and paid the sale tax in
2010 the tax is deductible in 2010.Can someone explain under what type of purchase deal one can by a car and pay taxes much later? It sure never happen in any of my new car purchases.
Mauro
Buy a car in New Hampshire, no sales tax, then register in NY later, you will now pay sales tax. Buy a car and then pay sales tax alter on when registering it.
bw
When you buy a used car from a private seller, you usually pay the sales tax when you register it.
BTDTGTR, John
That's interesting, but since the Schedule L deduction for sales tax paid to purchase a new car is based on a, um, new car, it would not apply.
Schedule A deduction, not Schedule L. You deduct the tax in the year paid if you elect to deduct state sales taxes instead of state income taxes on Schedule A.
In 2009, or for the last 9 months of the year or something like that, they had a rule that sales tax you paid to buy a car up to 45k would be added to your standard deduction on Schedule L. Incidentally, it could be added to Schedule A if you itemized and was allowed under AMT.
Since taxpayer paid the tax in 2010, they lose the special deduction, unless they were a accrual-based taxpayer, and even then I don't know for sure.
Not to beat a dead horse but the original post said we were dealing with a used car. The special rule that allowed one to add the sales tax to the standard deductions was for buying a new car between February 17 and December 31, 2009 if you didn't itemize.
Maybe the 2010 Sch L is for fiscal year filers then, because there is a 2010 Sch L out there.
The original post didn't say it was a "used" car.
The special rule for adding the tax to the standard deduction wasn't just for sales tax. It included an excise tax. Some jurisdictions bill the excise tax separately or collect it when the car is registered. Anyone who bought a "new" vehicle at the end of 2009, may have paid the sales or excise tax in 2010. As such, they could add the tax to the 2010 standard deduction if they do not itemize.
My understanding is that in some (midwestern?) states the normal procedure is to buy a car from a dealer, who issues you a temporary dealer plate but does not collect the sales tax. You then have a week or so to get your permanent plate from your local DMV, who also collects the appropriate sales tax at that time.
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