Can car excise tax in Oklahoma be deductible?

[rrp723]

Purchased a car in Oklahoma. Title, Excise Tax, Registration, Transfer, insurance are on the receipt from the Tag Agency. Which of these are deductible?

[DS30 · Accepted solution]

It depends.

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.

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 (for TurboTax Online sign-in, click Here) or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions & Credits”
3. 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)
4. Scroll down the screen until to come to the section “Cars and other things I own”
5. 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 (as opposed to state income taxes) and include 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 this transaction in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here) and click on "Take me to my return") type "Sales Tax Deduction" in the search bar then select "jump to Sales Tax Deduction". TurboTax will guide you in entering this information.

Alternatively, to enter your sales taxes and major purchases in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions & Credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Estimates and Other Taxes Paid ”
5. Choose "show more", then Sales Tax (start/update/revisit)
6. Choose - continue to sales tax and choose "Easy Guide"
7. Enter your state sales tax information (If your state sales tax information is already entered you will need to edit it to enter your major purchases information.)
8. On the screen that says Major Purchase - select "yes"
9. Enter your vehicle information and sales tax here on the next screen.

As noted above: you are only allowed the major purchase additional sales tax amount if the sales rate you used for your general state sales tax rate is the same sales tax rate on your major purchase.

So if you used a 8% general sales tax rate for your state, this would have to be the same sales tax rate for your vehicle purchase. Just make sure that when you enter this information under the "Major Purchase" section, that your sales tax divided by your cost is your general state's sales tax rate

[adam18adam]

YES.  I will admit that I only quickly read the answer above, but I think I disagree with their answer as it pertains to you.

If you strictly follow their guidance above, I don't think it would be deductible.  You did not pay a sales tax on it, you paid an excise tax, and the tax rate is not the same as the general sales tax rate.  You also are not paying an amount which is assessed annually, so I think that fails the test for car registration fees, and if I recall, OK is not listed in the listings of states with deductible portions of registration fees.

The most important aspect is that it is a called a "tax" and it is based on value and is required to be paid upon registering.  The most reputable location for an answer that I found was on the Oklahoma Tax Commission's (OTC) website.  Granted that isn't as "firm" of guidance as if it were on the IRS's website... The OTC's guidance said to deduct the amount you paid in taxes as part of your sales tax deduction, which is what I did, because I was taking the sales tax deduction rather than state income withholding deduction since my state income withholding was zero (because I received credits that was greater than my liability so I claimed exempt on my W-4).  You'll have to check to see which is larger for you since you have to choose - the sum of your sales tax deduction amount based on income PLUS the car excise tax - OR your state withholding (technically, you should also take into account the amount of any expected state income tax refund).   Something interesting, I saved the page (as a PDF) from the OTC's site, and the link is no longer active.  I found it on the "wayback machine" (internet archives) but can't find it on their current site, https://web.archive.org/web/20140224232818/http://www.tax.ok.gov/faq/faqiti12.html