Kansas City Income Tax Season Car Deals for BMW

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    The Federal Income Tax Benefits to Buy a Car or Truck

     

The Internal Revenue Service permits you to deduct sales tax of a car purchase by itemizing on Schedule A on Form 1040. You can’t claim a sales tax deduction unless you elect to itemize. You are allowed to deduct the tax whether you purchase from an auto dealer or private party.

Disclaimer. Always consult a federal tax specialist prior to filing deductions on your federal tax return.

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    Is Financing a New Vehicle Tax Deductible on State Taxes?

     

Yes, you are able to deduct the tax whether charged on a used or new car. You can only deduct the sales tax that is equal to what you paid when the car or truck was purchased by adding it to the Sales Tax Table for your state, as well as the car or truck registration fees that you paid, if your state bases the fee on the value of the vehicle. Those expenses are deductible only when itemized. In the specific case of sales tax, it needs to be higher than the state income tax that you paid.