You are still considered the owner of the car (regardless of if you are making installment payments to pay off the car loan).
You have 2 federal tax deductions related to the purchase of a new car. However, you will only be able to claim these taxes on your federal income tax return if they were paid during the calendar year related to tax year for which you are filing.
Please note that you would only be able to claim these deductions if you itemize so if these are your only itemized deductions, you will want to just take the standard deduction (see below)
Car Registration Deduction - the total amount of your registration fee is not deductible, just the portion that the state charged you for taxes based on the value of your vehicle. Not all state's registration fees are deductible. Please check this link to see if Is your Car Registration Deductible?
To enter your car registration fees in TurboTax Online or Desktop, please follow these steps:
- Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
- Next click on “Deductions & Credits”
- Next click on "jump to full list" or “I’ll choose what I work on” (You may get the car registration fee screen here - see screenshot)
- Scroll down the screen until to come to the section “Cars and other things I own”
- Choose "show more", then car registration fees and follow the onscreen instructions
Sales Tax Deduction - You have the choice to deduct the general sales tax for your state or the sales tax for all your major purchases. TurboTax will guide you in determining which of these provides you will the larger deduction.
To enter your sales taxes in TurboTax Online or Desktop, please follow these steps:
- Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
- Next click on “Deductions & Credits”
- Next click on "jump to full list" or “I’ll choose what I work on”
- Scroll down the screen until to come to the section “Estimates and Other Taxes Paid ”
- Choose "show more", then Sales Tax (start/update/revisit)
- Choose - continue to sales tax and have the program guide you (this will help the TurboTax program determine if taking a general sales tax or individual sales tax is better for your situation
