I bought a car this year (used) and paid all the registration, loan processing, license, tire and a whole bunch of other taxes and fees.
Are any of these qualify for a tax write-off? Thanks.
2006-12-27 04:27:19 · 6 answers · asked by insurancelawcase 1 in Business & Finance ➔ Taxes ➔ United States
If you mean for personal deductions, then only the VLF (vehicle license fee) is deductible as an itemized deduction on your Schedule A.
If you mean for business, then it needs to capitalized as part of the basis of the car and depreciated over 5 years. If the car is under 6,000 lbs then it is depreciated using the listed luxury automobile rules. But you can only depreciate the portion used for business. If you claim 100% business usage then good luck when you get audited.
100% business usage means NO commuting in that car, no using it before or after business hours for personal reasons (even just going to the corner grocery store), and it means you leaving the car on company premises after hours. That's 100% business.
2006-12-27 07:30:12 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Only the portion of the car registration fees that constitute a tax on the value of the car is tax deductible as a personal property tax. For example, in California, $36 of the registration fee is the actual registration fee, while the remainder is a property tax. Only the property tax portion is deductible.
2006-12-27 12:57:26 · answer #2 · answered by jseah114 6 · 2⤊ 0⤋
Contrary to what spicertax said. Congress didn't renew the Sales Tax deduction for 2006. In states like FL or TX where there isn't state income tax, tax payer used to be able to deduct sales tax instead of income tax on Schedule A. This is NO longer an option.
As to your original question. If the car is purchased for business use (i.e. you are a business owner), you can deduct the expenses against business income, while the cost of the car needs to amortize over time (depending on the year of the car).
If it is used partly for business, you can deduct the business portion. You have a choice of use either standard mileage rate or actual auto expenses. This requires you keep track of your mileage driven for business versus personal.
If this car is used for personal purpose only, you can deduct property tax on Schedule A.
Best wishes.
2006-12-27 16:24:58 · answer #3 · answered by JQT 6 · 0⤊ 1⤋
No. Only exception is that the sales tax can be deducted if you itemize and elect to deduct state sales taxes instead of state income taxes. This works in states like FL and TX.
2006-12-27 12:31:05 · answer #4 · answered by spicertax 5 · 1⤊ 0⤋
Yes, car registration tax is deductible from federal taxes. The mileage allowance, which has nothing to do with your question, goes to 48.5 cents on Monday.
2006-12-27 12:44:54 · answer #5 · answered by mattapan26 7 · 0⤊ 1⤋
If you use that car for work, you can deduct 44.5 cents per mile... but that includes your fuel, insurance, and all those other cost you mentioned.
2006-12-27 12:37:03 · answer #6 · answered by John Stamos 3 · 0⤊ 0⤋