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ryan_trudeau
New Member

I bought a new car in 2016, how do I claim the tax on that?

 
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Accepted Solutions
GeoffreyG
New Member

I bought a new car in 2016, how do I claim the tax on that?

As SuperUser @Rainman12 very correctly notes, claiming a sales tax deduction on your new car purchase will only make an actual difference on your tax return (i.e., to your tax refund), to the extent that you are otherwise able to Itemize your deductions, rather than taking the Standard deduction for your filing status.  For example, in 2016 a Married Filing Jointly couple under age 65 have a generous Standard deduction of $12,600 provided by law.   They do not have to list anything for it; they are given it automatically as they fill out their tax return.  Therefore, unless this couple has enough total Itemized deductions, including sales taxes, property taxes, mortgage interest, charitable donations, etc. to exceed that $12,600 threshold, then Itemizing deductions will do them no actual good.  As Rainman12 also notes, that is why only around 20% or so of taxpayers truly benefit from itemizing.

Let's assume, however, that you will benefit from an additional sales tax deduction.  In that case the following discussion, and instructions, will apply to you.

If you live in a state where you paid sales tax on your new car, and if you also itemize your tax deductions (on Form 1040, Schedule A) rather than taking the standard deduction, then the sales tax cost of the car can be separately added to the rest of your sales taxes paid during the year, in order to calculate your allowable sales tax deduction.

You will find this section, in TurboTax, among the Deductions & Credits portion of the interview.  Please see the attached screen-capture image for an illustration.  You can also type the words "sales tax car" into the Find / Search box on your TurboTax screen, and then click the Jump To link that should appear beneath -- that will take you to the appropriate TurboTax page.  Alternatively, you can find the sales tax section under the main Federal -> Deductions & Credits -> Estimates and Other Taxes Paid sub-menu (again, please see screen-capture below).

Thanks for asking your question, and please drive safely.

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2 Replies
Rainman12
Level 10

I bought a new car in 2016, how do I claim the tax on that?

Deductible Only if you itemize, And claim sales taxes. If you get to that point, you will be asked. (applies to <20% of returns) ...
GeoffreyG
New Member

I bought a new car in 2016, how do I claim the tax on that?

As SuperUser @Rainman12 very correctly notes, claiming a sales tax deduction on your new car purchase will only make an actual difference on your tax return (i.e., to your tax refund), to the extent that you are otherwise able to Itemize your deductions, rather than taking the Standard deduction for your filing status.  For example, in 2016 a Married Filing Jointly couple under age 65 have a generous Standard deduction of $12,600 provided by law.   They do not have to list anything for it; they are given it automatically as they fill out their tax return.  Therefore, unless this couple has enough total Itemized deductions, including sales taxes, property taxes, mortgage interest, charitable donations, etc. to exceed that $12,600 threshold, then Itemizing deductions will do them no actual good.  As Rainman12 also notes, that is why only around 20% or so of taxpayers truly benefit from itemizing.

Let's assume, however, that you will benefit from an additional sales tax deduction.  In that case the following discussion, and instructions, will apply to you.

If you live in a state where you paid sales tax on your new car, and if you also itemize your tax deductions (on Form 1040, Schedule A) rather than taking the standard deduction, then the sales tax cost of the car can be separately added to the rest of your sales taxes paid during the year, in order to calculate your allowable sales tax deduction.

You will find this section, in TurboTax, among the Deductions & Credits portion of the interview.  Please see the attached screen-capture image for an illustration.  You can also type the words "sales tax car" into the Find / Search box on your TurboTax screen, and then click the Jump To link that should appear beneath -- that will take you to the appropriate TurboTax page.  Alternatively, you can find the sales tax section under the main Federal -> Deductions & Credits -> Estimates and Other Taxes Paid sub-menu (again, please see screen-capture below).

Thanks for asking your question, and please drive safely.

View solution in original post

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