My State (Maine) lets me deduct the excise tax paid at the registration. Where would I enter this??

snadeau12 · ‎May 31, 2019

I have entered this info in Federal Taxes under deductions and credits. Is this correct??

GeoffreyG · ‎May 31, 2019

In Maine, you may deduct the sales taxes paid on the purchase of a new vehicle; or rather you would include it along with your other sales taxes paid, in lieu of the alternative choice of taking a deduction for state sales taxes paid.

You can also deduct the excise tax portion of your Maine vehicle registration, as it based on the value of the vehicle, but in a different place than you will for most other states that charge an excise tax.

Instead of the vehicle registration section of TurboTax, you will instead want to make your excise tax entry under the Personal Property Tax section. If you try to do it under Vehicle Resgistration, the software checks for your state of residence and determines that you cannot deduct the tax. (Please see screen-capture number one below this answer for a visual illustration).

TurboTax is correct in preventing you from deducting your excise tax here, but that doesn't stop you from deducting the tax in another place, which is the Personal Property section. (Please see the second and third screen-capture images for an illustration.) Following this procedure will ensure that the deduction appears on the appropriate line of your Form 1040 Schedule A (i.e., itemized deductions).

For additional information on how the Maine excise tax is calculated, you may refer to the following government webpage:

http://www.maine.gov/revenue/propertytax/sidebar/excisetax.htm

Finally, it is also important to keep in mind that you (or anyone claiming this deduction) may or may not actually see any net tax benefit from including this item on your tax return. The reason for this is that you must have enough itemized deductions (in total) to exceed the standard deduction available to all taxpayers. Since more than 2 in 3 taxpayers do not, most people end up taking the (more valuable) standard deduction, rather than itemizing deductions. If you input all your data carefully, including the ME vehicle excise tax, however, the TurboTax software will make that determination for you.

Thank you for asking your question, and hopefully you will find this answer helpful.

View solution in original post

GeoffreyG · ‎May 31, 2019

In Maine, you may deduct the sales taxes paid on the purchase of a new vehicle; or rather you would include it along with your other sales taxes paid, in lieu of the alternative choice of taking a deduction for state sales taxes paid.

You can also deduct the excise tax portion of your Maine vehicle registration, as it based on the value of the vehicle, but in a different place than you will for most other states that charge an excise tax.

Instead of the vehicle registration section of TurboTax, you will instead want to make your excise tax entry under the Personal Property Tax section. If you try to do it under Vehicle Resgistration, the software checks for your state of residence and determines that you cannot deduct the tax. (Please see screen-capture number one below this answer for a visual illustration).

TurboTax is correct in preventing you from deducting your excise tax here, but that doesn't stop you from deducting the tax in another place, which is the Personal Property section. (Please see the second and third screen-capture images for an illustration.) Following this procedure will ensure that the deduction appears on the appropriate line of your Form 1040 Schedule A (i.e., itemized deductions).

For additional information on how the Maine excise tax is calculated, you may refer to the following government webpage:

http://www.maine.gov/revenue/propertytax/sidebar/excisetax.htm

Finally, it is also important to keep in mind that you (or anyone claiming this deduction) may or may not actually see any net tax benefit from including this item on your tax return. The reason for this is that you must have enough itemized deductions (in total) to exceed the standard deduction available to all taxpayers. Since more than 2 in 3 taxpayers do not, most people end up taking the (more valuable) standard deduction, rather than itemizing deductions. If you input all your data carefully, including the ME vehicle excise tax, however, the TurboTax software will make that determination for you.

Thank you for asking your question, and hopefully you will find this answer helpful.

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My State (Maine) lets me deduct the excise tax paid at the registration. Where would I enter this??