Car Purchase deductions in TT when itemizing

[Cris]

I purchased a pre-owned Nissan Rogue in 2024 from a dealership in Iowa.  I live in Illinois.  I will be itemizing my deductions on my 2024 return.  TT asks about car registration fees.  I am not sure which of these fees listed on the Bill of Sale (see below) are deductible (for Fed and IL).  Please advise as to what I can enter into TT under "Car Registration Fee".

Price of Vehicle..................... $17,500

Theft Prevention......................... $299

Sub-Total ............................... $17,799

Fee for new registration.... $1,112.44 (I think this is a 6.25% IL Sales Tax, $17,799 X .0625=$1,112.44)

Title Fee...................................... $151

License Fee................................ $189

Documentary Fee ..................... $180

Total Balance.....................$19,421.44

[xmasbaby0]

Vehicle registration fees are not deductible for cars registered in IL.    If you are itemizing deductions for your federal return, you can enter sales tax you paid for the car----but then you will not be able to use property tax paid for your home--if you own a home---so choose carefully.

Itemized deductions have no effect unless you have enough itemized deductions on Schedule A to exceed your standard deduction.

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns.  The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts)   The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the tax laws that have been in effect since 2018, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income. The standard deduction makes some of your income “tax free.”  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2024 Form 1040.

2024 STANDARD DEDUCTION AMOUNTS

SINGLE $14,600    (65 or older/legally blind + $1950)

MARRIED FILING SEPARATELY $14,600    (65 or older/legally blind + $1550)

MARRIED FILING JOINTLY $29,200    (65 or older/legally blind + $1550)

HEAD OF HOUSEHOLD $21,900    (65 or older/legally blind + $1950)

[Cris · Accepted solution]

Good suggestion about Sales Tax versus Property Tax.  I will definitely use Property Tax deduction as it is much higher.

I have very high medical expenses this year that I was not reimbursed for (Surgeon opted out of Medicare) so it makes sense to itemize for 2024.

Within TT if I key in $340 (versus $151) I see a $24 increase in my federal refund.  So which line items that I listed are considered a car registration fee?