We bought a car and put several thousand down. We, of course, paid TT&L as a normal part of this transaction. However, the remainder of the amount of the car (approx 20k) was a loan. Is the tax we paid in TT&L what we would put in this area?
Find the "Sales Tax" itemized on your Bill of Sale. It doesn't matter that you took out an auto loan.
What a useless answer.
>:O aaahh
do I include the loan in the total cost of the car when turbo tax asks for "how much did you pay for the car?"
Cuz I am bearing that debt. I am liable. I bought a car and put 12k down but the loan is 30k. Do i put down 42k for car cost or 12k? This is a serious change in the tax results and one of the answers is wrong.
The total cost for the vehicle is the sale price of the car. In many cases it is the down payment plus "the loan" (provided the loan was only for the vehicle). Interest on a car loan is not deductible on an individual tax return. However, as @fanfare stated, the sales tax may be if you itemize deductions.
Thank you! I will include the loan in in the vehicle cost. C:
Frankly, this question only comes up because Turbotax thinks you are stupid. The IRS only needs to know the amount of sales tax you paid. If you are using the standard allowance method, the IRS has a table that assigns an amount of sales tax you are allowed to claim based on your income and location. It's probably a fair estimate. You can only add to the standard allowance, sales tax you paid for the purchase of a motor vehicle aircraft, a home, or a major renovation to the home. (There is no "major purchase" rule, it is only those 4 specific things.)
Instead of Turbotax asking for the sales tax from your bill of sale, Turbotax thinks you can't look that up, so it asks for the purchase price of the car so it can calculate the rate. Sometimes, this can actually lead to a wrong answer. If you buy a $40,000 car with a $10,000 trade in, your purchase price that you pay sales tax on is usually $30,000, not $40,000, so if you answer $40,000, you will get a false deduction.
In your case, if you buy a car for $40,000 with some combination of cash down payment and a loan, then your purchase price is $40,000.
But again, you can't deduct title and license fees, only the sales tax.
It would be better if Turbotax simply asked for the amount of sales tax you actually paid.
What you paid for the car is the price listed on the sales reciept no matter how the sales price was eventually paid. You could have paid by cash, a check, a Credit Card OR funds you got from a loan (or any combination of payment types) and the answer is still the same ... you paid X for the car period. Now if you take out a loan then the interest you pay on the loan is an expense ... it is not added to the cost basis of the car.