If I sell my car to a private buyer for over $10,000 do I have to report that income to the IRS or state?

Question

sounds like an easy question, but I haven't heard a straight answer yet from anyone.

Answer 1

You report the profit. If you paid $8000 and that is the fair market value but you received $10,000 for it, then you would report $2000 as profit and income.

If the fair market value was $12,000 but you sold at $10,000 then you did not make a profit but you do not get to deduct the $2000 loss either.

Find the blue book value of the vehicle or have a reliable appraisal of the car's value. I believe CarMax will give you an estimate on it. From there, you can determine if you made money on the sale.

But, no, you do not need to report the entire transaction as income.

Answer 2

What did you purchase the vehicle for? Was the vehicle used for business purposes?

If it is a personal use only vehicle, and you purchased the vehicle for more than the sales price, then you do not have to report the sale as income.

If you purchased the vehicle for less than the sales price, then the gain on the sale goes on Schedule D and you will pay capital gains tax on the difference between the sales price and the original purchase price.

If the vehicle was used in business, you have a more complicated situation since it is partially a business asset and you have to account for previous deductions you may have taken. Use Form 4797 and transfer any gain to Schedule D.

Answer 3

You have to pay taxes on the profit from the sale. It's income and therefore taxable. However, how it's valued and what you have to pay may vary by state:
http://www.ncsl.org/programs/fiscal/autotaxs.htm

Add: re the above--of course there's a paper trail; you have to report the sale price on the transfer paperwork.

Answer 4

If you sold the car at a gain, you would report this on Form 1040 Schedule D. You would also need to know your cost basis.

If you sold the car at a loss, you would not report it as the loss is not deductible.

Answer 5

You absolutely do. The buyer had to report the purchase price when he registered it at the DMV... there's your paper trail. If the buyer reported a price other than what he paid, you may want to ask him what he reported so you can report the same.

Answer 6

It relies upon on your community rules. some states assign the plates to the vehicle, others assign them to the guy. you may desire to confirm the way it works in Mass by skill of calling the DMV. In maximum states you will shop the plates and the customer is responsible for paying for new plates of their call. the customer is responsible for registering the vehicle while they become the criminal proprietor. while they pay for the vehicle and when you sign over the call. They present day the call to the DMV and sign in the vehicle of their call.

Answer 7

it depends if you use it as part of a business or not if it was part of a business operation you may be eligible for business depreciation tax credit, if you are just selling it as a individual owner probably not it is most likely that the car has depreciated during your ownership and would not have to declare it as a capital gain.

Answer 8

Only if you sold the car at a profit from when you bought it.

Answer 9

Yes you have to. I do taxes, and this is other income. If you buy another car or do something with the money that may qualify, and maybe taken into consideration.

Answer 10

If you're totally, brutally honest on your federal tax return... you'd report it as "Other Income."

However, most people don't. If there's not a clear paper trail, most people would ignore it. Honestly, I sincerely doubt anybody would report such a sale on any return if there was no paper trail.