I paid sales tax and VSC tax on new vehicle in Washington State. Can I claim both as sales tax?

[DS30 · Accepted solution]

Yes. You will be able to deduct the VSC tax as a car registration fee (since this tax is based on the value of the vehicle) and the sales tax as a sales tax on major purchases (if you claim the state sale's tax deduction)

You have 2 federal tax deductions related to the purchase of a car. However, you will only be able to claim these tax deductions 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. This does not include the yearly tag fees but only the Ad Valorem Tax which is a deductible tax added to the tag fee. Please check this link to see if Is your Car Registration Deductible? 

For Example, your annual car registration fee is based on a formula that charges $2 per 100 pounds of vehicle weight, $1 per $1,000 of value, a flat $10 for license plate tabs, and $35 in other taxes and charges. If you had a 4,200-pound vehicle with a value estimated by the state at $25,000, then your fee would be $154 ($84 plus $25 plus $10 plus $35). Of that, only $25 would be an itemized deduction, because that's the only portion based on the actual value of the vehicle. 

To enter your car registration fees in TurboTax Online (for TurboTax Online sign-in, click Here , then select "Take Me to My Return") 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.