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    kimhood's Avatar
    kimhood Posts: 1, Reputation: 1
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    #1

    Feb 9, 2008, 07:53 PM
    Deducting taxes paid for a new car
    We bought a new vehicle in 2007. What can we deduct from our taxes regarding the amount paid for tax, title, and license?
    JBeaucaire's Avatar
    JBeaucaire Posts: 5,426, Reputation: 997
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    #2

    Feb 9, 2008, 11:17 PM
    DMV fees, yes. Taxes... on home mortgage not on a car.

    If this car is being used for actual work-related activities, then all this could change. If it's just personal transportation, there are no special considerations for owning it, other than yearly registration fees.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #3

    Feb 11, 2008, 09:17 AM
    What state do you live in? A certain portion of the registration fee may be deductible, depending on your state.

    Also, you have the option of deducting either state income taxes, or state sales taxes, but not both. So compare the state income tax you paid versus the sales tax paid and see which works best for. To estimate the amount of sales tax you are allowed to deduct, see instructions for schedule B, and then add the specific amount of sales tax paid on the car. As a general rule of thumb, most people who live in states with an income tax will find that deducting income taxes is better than deducting sales taxes, but try it and see.

    http://www.irs.gov/pub/irs-pdf/i1040sa.pdf
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