Privilege Tax Deductions

[jlayne2888]

When preparing taxes are privilege taxes for the purchase of a boat or vehicle entered the same as property tax(included with property taxes) or if not where is privilege tax entered if its deductible?

Thank you,

Jeff

[ToddL99]

If this is a tax collected at the time of purchase and based on the value of the purchase, it may be a sales tax. Sales taxes are deductible, but only if you itemize deductions, claim sales taxes over state income taxes, and the total of those taxes (real estate, income or sales, and personal property) does not exceed $10,000 (federal return). Go to Deductions and Credits > Estimates and Other Taxes Paid > Sales Tax interview.

If this "privilege tax" is collected in addition to a sales tax and is based on the value of the boat or vehicle, then it qualifies as a property tax and can be deducted (subject to the same limitations listed above). Go to Deductions and Credits > Cars and Other Things You Own > Personal Property Taxes interview.

[jlayne2888]

Thanks for your information.  To clarify the boat was purchased in Tennessee where no taxes were paid and the boat was brought back to WV to title and the WV department of motor vehicles receipt only shows title application fee, lien fee, and the privilege tax.  I take it this is the tax on the purchase of the boat and called "privilege" tax since it cost over a given amount that it considered for privilege.

[ToddL99]

The West Virginia "privilege tax" appears to be a sales tax, since it is assessed at 5% to 6% of the total cost of a purchased vehicle, at the time of purchase/registration.

From the Huntington WV Herald Dispatch newspaper, June 25, 2017 : "Senate Bill 1006 increases the state's gas tax, some Division of Motor Vehicles fees, and the privilege tax on buying a car. The privilege tax will go from 5 percent of the total cost of purchasing a vehicle to 6 percent of the cost."

[jlayne2888]

Thanks again Todd.  I do not think I will be itemizing since the standard is over $24grand now but will it have an effect on my state tax by showing it anyway?  Last question.

[ToddL99]

If you are taking the standard deduction, it is unlikely that it will have an effect on your state taxes.

We still recommend that you make the entry, and let the TurboTax state program see if it applies to your particular state tax calculation. 

[jlayne2888]

thank you very much.  have a good day and stay safe!