Tax Year Prior to 2020: Is sales tax on a financed car, tax deductible

[ValerieE]

Yes.  If you took out a loan to pay for the car you can still claim the sales tax on the car.  However, if you do not have enough total deductions to equal more than your standard deduction you may not see a change in your tax due/refund.

[mahreenaliq]

Where and in which section do I need to mention about my car.

Note that I got the car 2 years back, and I have not mentioned my car loan in last year tax filing process.

Please guide me

- Mahreen Ali

[ReginaM]

You can deduct sales tax on a new or used purchased or leased vehicle. To claim sales taxes on a vehicle or boat you need to meet two criteria.  

• You must itemize deductions, and
• your sales tax deduction, including the sales tax on the vehicle must exceed your state income tax.

Realistically,in most states with a state income tax, the state income taxes would be higher than the sales taxes paid, even with sales tax on a car added.

If you claim the standard deduction, you cannot deduct sales taxes.

The deduction for sales tax is under the deductions and credits tab.  

1. Go to:  Deductions and Credits
2. Estimates and Other Taxes Paid
3. Sales Tax.
4. Click Update
5. Select  Sales Tax.
6. Click Continue.
7. Select Easy Guide.
8. Click Edit next to your sales tax rate.
9. Click Continue twice and you will then be on the page where you enter your car or other major purchases.

[AlThePal78]

How would I find out my sales tax on a vehicle that I financed through a DealerShip?

[VictorW9]

Usually, the sales tax is paid when you register your vehicle with your state motor vehicle department. At least, that's what it is for my state. It might be different depending on which state you live. Check with your dealer.