Issue 31.09
Ken Hinton, partner at HintonBurdick CPAs & Advisors suggests, “If you are planning on taking the standard deduction when you file your 2009 tax return, there are a couple of additional deductions you could be entitled to: a sales tax deduction on the purchase of a new vehicle and a property tax deduction”.
According to advertisements, it’s a great time to buy a new vehicle. In addition to the deals being offered by car dealerships, the IRS is also offering a deal to those who buy a new motor vehicle: the opportunity to deduct the sales tax paid on the purchase.
“Although a deduction for sales tax paid on major purchases has been an option in previous years, the deduction allowed was only an itemized deduction. If the standard deduction was greater than the itemized deduction total, no tax savings was realized. This new deduction can be taken regardless if one chooses to itemize or to take the standard deduction,” stated Hinton.
This deal is not just limited to a car or truck, but also includes purchases of a motor home or motorcycle. However, the vehicle purchased must be a new vehicle, meaning not just “new” to you. It must be brand new.
According to Hinton, “As always, the IRS does place some limitations on this deduction. The purchase must occur after February 16, 2009 and before January 1, 2010.” The state and local sales tax that can be deducted is limited to the tax paid on a purchase up to $49,500.
“Another relatively new deduction taxpayers are allowed to take in addition to the standard deduction is a deduction for real property taxes,” continued Hinton. In years before 2008, the law has allowed a deduction for real property taxes if the taxpayer chooses to itemize. If real property taxes are paid but the taxpayer’s itemized deductions are less than the standard deduction, no tax benefit is realized for paying the property tax. The new law allows one to deduct the amount of real property tax paid up to $1,000 if filing a joint return (up to $500 if filing single) when one elects to take the standard deduction. If one chooses to itemize, the taxpayer can still deduct the property tax paid.
Taxpayers taking the standard deduction in 2009 could end up with a couple of additional deductions, and therefore a reduced amount of tax.
If you have further questions, please feel free to contact our office at HintonBurdick CPAs & Advisors, (435) 628-3663. Also, visit our Web site at www.hintonburdick.com for weekly tax tips.