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toric2014
Returning Member

Deduction: Major purchase

I need advise on how to fill in the Cost Excluding Tax, Sales Tax Paid, and Sales Tax Percent boxes? Purchase price of new car $39,752.43 which includes purchase price and warranties, I made a $13,000 down payment for a total financed $26,752.43. I made a private sale on my prior vehicle of $9,250, instead of trading in- this was applied as a tax credit which acted as a trade in allowance when paying sales tax. Total tax paid $2063.91.

2 Best answer

Accepted Solutions
ColeenD3
Expert Alumni

Deduction: Major purchase

The amounts of the down payment and amount financed is irrelevant. The amount you paid in sales tax is what counts. You stated that amount was $2063.91

 

You said you sold your prior vehicle in a private sale but somehow it also counted as a trade in allowance? 

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MarilynG1
Expert Alumni

Deduction: Major purchase

If you are trying to claim an Additional Sales Tax Deduction in your Federal Return for your vehicle purchase, the amount of Sales Tax you paid (as on your contract) is the only number to be concerned about. 

 

You will only receive the Sales Tax Deduction if it is LARGER than the amount of Income Tax you paid on your Wages. 

 

The amount of Sales Tax you were charged most likely was calculated on the Sale Price after the trade in allowance was figured.

 

Click the link for more info on Sales Tax versus Income Tax.

 

TurboTax will choose whichever is the larger deduction for you. 

 

 

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**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

3 Replies
ColeenD3
Expert Alumni

Deduction: Major purchase

The amounts of the down payment and amount financed is irrelevant. The amount you paid in sales tax is what counts. You stated that amount was $2063.91

 

You said you sold your prior vehicle in a private sale but somehow it also counted as a trade in allowance? 

toric2014
Returning Member

Deduction: Major purchase

Thank you for the response. Yes, in the state of Arkansas you can use the sale of a vehicle 45 days prior to or after the purchase of a new vehicle as a tax credit on the purchase, it is called a 45 days tax credit.  So it basically acts as a trade in allowance when you pay sales tax. I guess I need to know if I should enter in the total I paid for the vehicle or should I subtract the $9200 from the purchase price since it was deducted when paying sales tax? 

MarilynG1
Expert Alumni

Deduction: Major purchase

If you are trying to claim an Additional Sales Tax Deduction in your Federal Return for your vehicle purchase, the amount of Sales Tax you paid (as on your contract) is the only number to be concerned about. 

 

You will only receive the Sales Tax Deduction if it is LARGER than the amount of Income Tax you paid on your Wages. 

 

The amount of Sales Tax you were charged most likely was calculated on the Sale Price after the trade in allowance was figured.

 

Click the link for more info on Sales Tax versus Income Tax.

 

TurboTax will choose whichever is the larger deduction for you. 

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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