|IR-2009-88, Oct. 7, 2009
With 2010 models arriving in dealer
showrooms, the Internal Revenue Service
reminds taxpayers that purchasing a new car, light
truck, motor home or motorcycle could qualify them
for a special deduction for the state and local
sales and excise taxes on their 2009 tax returns.
Purchases made before Jan. 1,
2010, will qualify for this deduction under the
American Recovery & Reinvestment Act of 2009 (ARRA).
The deduction is limited to the
sales and excise taxes and similar fees paid on up
to $49,500 of the purchase price of a new vehicle.
The deduction is reduced for joint filers with
modified adjusted gross incomes (MAGI) between
$250,000 and $260,000 and other taxpayers with MAGI
between $125,000 and $135,000. Taxpayers with higher
incomes do not qualify.
Taxpayers who make qualifying new
vehicle purchases this year can estimate the
deduction with the help of Worksheet 10 in IRS
Publication 919, How Do I Adjust My
Withholding? Lines 10a to 10k of the worksheet show
how to take into account purchases above the $49,500
limit, as well as the reduced deductions for
taxpayers at higher income levels.
The special deduction is available
regardless of whether taxpayers itemize deductions
on their returns. Taxpayers who do not itemize will
add this additional amount to the standard deduction
on their 2009 tax return.
For those that have questions
about the deduction for sales tax and other fees,
questions and answers might help. A videovideo
on the IRS Youtube.com channel and audio podcasts in
English and Spanish are also available to help
taxpayers take full advantage of the deduction.