You can enter the sales tax you paid for the car you purchased in 2019 by going to Federal>Deductions and Credits>Estimates and Other Taxes Paid> Sales Tax. You will be asked if you paid sales tax on a major purchase, and you will be able to enter the sales tax you paid for your new vehicle.
Sales tax is an itemized deduction. If your state has a state income tax, you have to choose between using the deduction for your state tax paid OR the sales tax deduction, whichever is higher. The TT process will suggest one or the other as you prepare your return. And it is hard to have enough itemized deductions to exceed your standard deduction. Unless all of your itemized deductions exceed your standard deduction, they will have no effect.
“Major purchases” that you can enter for the sales tax deduction include:
Motor Vehicles (cars, trucks, motor homes, RV’s, sport utility vehicles and off-road vehicles
Aircraft or boats
Building materials for major home improvements
You cannot deduct: furniture, jewelry, home electronics such as TV’s or computers
There is now a $10,000 cap on the state and local taxes you can deduct on your federal return.
In your itemized deductions, you can opt to deduct state income taxes or state sales taxes.
If you opt for state sales taxes, you can deduct the Arizona sales tax paid on the purchase of a new vehicle (in addition to general sales tax calculated by the IRS calculator). You can use this deduction only if you itemize.
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