Write Off Sales Tax

dudafunk · 12-06-2009, 12:11 PM

Quote:

Originally Posted by zip159

I think I read somewhere that this applies even to people who do not itemize because it's a line added to the 1040 itself. Not 100% sure though.

Yes that is correct.

Micas · 12-06-2009, 04:36 PM

Quote:

Originally Posted by kannibul

Deduct...not write off.

Deduction and write off are the same exact thing.

dudafunk · 12-06-2009, 07:44 PM

Quote:

Originally Posted by dudafunk

Your 30% sounds like FEDERAL TAX. Where does the question of federal tax brackets come in? I was thinking this is how it works:

Car: 30,000
NY sales tax: 8.625% = $2587
NY sales tax table for salary $20k+ = 6.85%
So refund = 6.85% of 2,587 = $177.

And so, agree with the OP - savings are really negligible. When the quoted post said $936, I felt I had been wrong about this tax credit law. Can someone confirm?

I guess basically you just subtract the car cost from your taxable income for both federal and state tax forms - and THEN carry on with the usual calculation (apply std deductions etc. etc.)... but anyway, I confirmed, its not going to result in a $900+ saving by any means as someone above pointed out.

Micas · 12-06-2009, 10:19 PM

Quote:

Originally Posted by dudafunk

I guess basically you just subtract the car cost from your taxable income for both federal and state tax forms - and THEN carry on with the usual calculation (apply std deductions etc. etc.)... but anyway, I confirmed, its not going to result in a $900+ saving by any means as someone above pointed out.

That's not correct. You do not deduct the cost of the car from your taxable income. That would be a massive deduction.

You deduct the sales tax that was paid on the car on your federal return, not your state return. Again, this has absolutely nothing to do, what-so-ever, with state tax returns. It's only federal.

Also, as someone pointed out, the amount of money this reduces your tax burden by is directly proportional to the percentage of your adjust gross income that is actually taxed.. i.e., the higher your tax bracket, the more money you save on your tax bill.

dudafunk · 12-07-2009, 09:11 AM

^^^ I'm sorry, yes I made a typo. Meant to say deduct cost of tax paid ON the car. And that in the end this saving is negligible for an say an average buyer who say makes 50-70k a year.

zip159 · 12-07-2009, 05:52 PM

Quote:

Originally Posted by dudafunk

^^^ I'm sorry, yes I made a typo. Meant to say deduct cost of tax paid ON the car. And that in the end this saving is negligible for an say an average buyer who say makes 50-70k a year.

The formula is quite simple assuming you don't drop to a lower bracket from your deductions: (Federal Tax Bracket) * (Sales Tax Paid)

@60k/year you're in the 25% tax bracket
If you paid 2,000 on sales taxes on the car then you get back $500. That's almost 2 Playstation 3s!

Quote:

Originally Posted by dudafunk

I guess basically you just subtract the car cost from your taxable income for both federal and state tax forms - and THEN carry on with the usual calculation (apply std deductions etc. etc.)... but anyway, I confirmed, its not going to result in a $900+ saving by any means as someone above pointed out.

It was $900+ for that particular person since he is in the 30% bracket and he paid almost 10% in sales taxes.

dudafunk · 12-07-2009, 07:17 PM

^^^^ Oh okay....

way2fast · 12-15-2009, 09:51 PM

Quote:

Originally Posted by Micas

What's been this way in Texas for a while? Texas has no state income tax, and you've never been able to deduct sales tax from a car purchase on your federal return before.

Florida also has no state income tax and we are alowed to deduct ALL sales taxes paid during the year. I keep all my receipts and the actual tax paid is always more than what is printed in the tax table especially if a major purchase ...ie auto...was made during the year.

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12-07-2009, 09:11 AM	#20 (permalink)
dudafunk Enthusiast Member Join Date: Nov 2009 Location: Long Island, NY Posts: 421 Drives: '09 370z Base Red AT Rep Power: 16	^^^ I'm sorry, yes I made a typo. Meant to say deduct cost of tax paid ON the car. And that in the end this saving is negligible for an say an average buyer who say makes 50-70k a year.

12-07-2009, 07:17 PM	#22 (permalink)
dudafunk Enthusiast Member Join Date: Nov 2009 Location: Long Island, NY Posts: 421 Drives: '09 370z Base Red AT Rep Power: 16	^^^^ Oh okay....