☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 3
posted Mar 26, 2023 7:41:22 AM

CA - how to file Use Tax paid for a new car

Hi,

 

I have purchased a new car from Arizona and dealer did registration for CA where I live. Rather than Sales Tax dealer reported/paid "Use Tax" to CA. How do I file "Use Tax" in Turbo tax Deluxe in Federal (& State) tax as only seeing Sales Tax option in deductions. 

0 3 1001
1 Best answer
Expert Alumni
Mar 26, 2023 8:04:15 AM

Yes, use tax is the same as sales tax for the purpose of this deduction. The sales tax deduction is for "State and local general sales taxes, including compensating use taxes." - IRS Publication 17

 

The state sales tax deduction is allowed instead of your state income tax deduction, and is capped at $10,0000 ($5,000 if married filing separately). 

 

It is part of itemized deductions, so your total itemized deductions must be more than your standard deduction to affect your taxes. 

 

To enter the amount in TurboTax:

 

  1. Select Federal from the left side menu, then Deductions & Credits. 
  2. Scroll down to Estimates and Other Taxes Paid and expand the section.
  3. To the right of Sales Tax, click Start or Revisit.
  4. Select Continue with Sales Tax. 
  5. Select Easy Guide.
  6. Answer the questions about where you lived.
  7. On the screen Major Purchases, answer Yes. 
  8. Enter the information about your car purchase. 
  9. Continue through the section and TurboTax will let you know which deduction is best for you. 
     

3 Replies
Expert Alumni
Mar 26, 2023 8:04:15 AM

Yes, use tax is the same as sales tax for the purpose of this deduction. The sales tax deduction is for "State and local general sales taxes, including compensating use taxes." - IRS Publication 17

 

The state sales tax deduction is allowed instead of your state income tax deduction, and is capped at $10,0000 ($5,000 if married filing separately). 

 

It is part of itemized deductions, so your total itemized deductions must be more than your standard deduction to affect your taxes. 

 

To enter the amount in TurboTax:

 

  1. Select Federal from the left side menu, then Deductions & Credits. 
  2. Scroll down to Estimates and Other Taxes Paid and expand the section.
  3. To the right of Sales Tax, click Start or Revisit.
  4. Select Continue with Sales Tax. 
  5. Select Easy Guide.
  6. Answer the questions about where you lived.
  7. On the screen Major Purchases, answer Yes. 
  8. Enter the information about your car purchase. 
  9. Continue through the section and TurboTax will let you know which deduction is best for you. 
     

Level 3
Mar 26, 2023 6:32:47 PM

Hi Julie, Excellent info on previous thread. 

 

Just checking if you have idea about 

 

In Federal smart check , seeing 

"Home Mortgage interest worksheet (WF) Refi must be entered" 

select one of below: 
  • No entry
  • Refinance Yes
  • Refinance No

 

I have not refinanced, so not sure what is this for and why it catching in smart check.

Expert Alumni
Mar 28, 2023 11:18:17 AM

If you did not refinance just check the box for no refinancing.  There are several reasons why that question is asked.

 

When refinancing a mortgage to get a lower interest rate or obtain more favorable loan terms, you're really just taking out a new loan and using the money to pay off your existing home loan. In general, the same tax deductions are available when you're refinancing a mortgage as when you're taking out a mortgage to buy a home.

 

However, sometimes when entering mortgage balances for the old and the refinanced amount your total loan balance may exceed the $750,000 limit.  By answering this question it can eliminate need for further information.  Also, you may have mortgage points paid on a refinance that can be deductible.

 

@Kmalesh