It depends.
You have 1 federal tax deduction related to your car (and another one 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:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Personal" tab in
TurboTax Home & Business)
- Next click on “Deductions
& Credits”
- 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)
- Scroll down the screen until
to come to the section “Cars and other things I own”
- 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:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Personal" tab in
TurboTax Home & Business)
- Next click on “Deductions
& Credits”
- Next click on "jump to
full list" or “I’ll choose what I work on”
- Scroll down the screen until
to come to the section “Estimates and Other Taxes Paid ”
- Choose "show more",
then Sales Tax (start/update/revisit)
- Choose - continue to sales
tax and choose "Easy Guide"
- 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.)
- On the screen that says
Major Purchase - select "yes"
- Enter your vehicle
information and sales tax here on the next screen.
As noted above: you
are only allowed the major purchase additional sales tax amount if the sales
rate you used for your general state sales tax rate is the same sales tax rate
on your major purchase.
So if you used a 8%
general sales tax rate for your state, this would have to be the same sales tax
rate for your vehicle purchase. Just make sure that when you enter this
information under the "Major Purchase" section, that your sales tax
divided by your cost is your general state's sales tax rate
