Schedule A, line 7, sales tax on new car

[dyne]

The 1040 schedule A, line 7 allows a sales tax deduction on new vehicles purchased
after Feb 16, 2009 and before Jan 1, 2010 but paid during the year 2010. When would
this ever happen? Normally the sales tax is paid when the car is purchased. Is this saying
that a car could be purchased during the 2009 period but a payment made during 2010?
I do not understand this. Is this when the buyer paid the sales tax separately himself
during 2010?

[Jiggers]

Could Happen

The 1040 schedule A, line 7 allows a sales tax deduction on new vehicles purchased
after Feb 16, 2009 and before Jan 1, 2010 but paid during the year 2010. When would
this ever happen? Normally the sales tax is paid when the car is purchased. Is this saying
that a car could be purchased during the 2009 period but a payment made during 2010?
I do not understand this. Is this when the buyer paid the sales tax separately himself
during 2010?

The way it was explained at a recent seminar is that it could happen where the tax wasn't paid until 2010, for whatever reason.

[Snaggletooth]

Does is matter?

I think they extended this anyway, did they not? Sales tax is still deductible on any car for Sch A if the itemizer elects to deduct this instead of state income taxes.

I think what did NOT get extended was the increase in standard deduction for sales tax on a NEW car. I think 2009 was the last year for this.

But the last-minute-extension is still only a few days old. I'm not well-informed yet on what happened, but I'll have to get up-to-speed on this quickly.

[Jesse]

The way it was explained at a recent seminar is that it could happen where the tax wasn't paid until 2010, for whatever reason.

To the best of my knowledge the increase in standard deduction for sales tax paid on a new car did not get extended, however as Jiggers pointed out some States/Counties for whatever reason, purchases toward the end of the year did not require the tax to be paid until 2010. In these rare cases the taxpayer will be able to increase their standard deduction for the sales tax on the new car actually purchased in 2009.

[travis bickle]

Doesn't work the same in all states

The 1040 schedule A, line 7 allows a sales tax deduction on new vehicles purchased
after Feb 16, 2009 and before Jan 1, 2010 but paid during the year 2010. When would
this ever happen? Normally the sales tax is paid when the car is purchased. Is this saying
that a car could be purchased during the 2009 period but a payment made during 2010?
I do not understand this. Is this when the buyer paid the sales tax separately himself
during 2010?

In certain states (I believe MO is one of them -- please correct me if necessary) paying the sales tax occurs after the vehicle is purchased and that sales tax payment occurs at the DMV office at the time of registration.

So, a car as a Christmas present is almost always a situation where the sales tax is paid in January, since the DMV is usually closed for certain days between Dec 25 and Dec 31.

Obviously the paying of sales tax at the dealership is much more common.

[Uncle Sam]

Sales Tax on New Car

I had a client who put a $ 500 deposit down on a car in December 2009 - but delivery and full complete payment didn't take place until January 2010.

He asked me whether he could use the $ 500 as a sales tax deduction in 2009 - but I learned that it could only be taken when the auto is delivered and paid for in full.

[PIGLEE]

We purchased a car in New Mexico one year. We had 2 weeks (I think), to register the vehicle in Arizona (where we live) and TO PAY THE SALES TAX.

[dyne]

Drake Tax Software allows the sales tax to be ADDED to the standard deduction for the year 2010 but only for sales tax paid during 2010 for a new car purchased during the period in 2009. I do not expect to ever encounter this issue.

[taxxcpa]

Same here

We purchased a car in New Mexico one year. We had 2 weeks (I think), to register the vehicle in Arizona (where we live) and TO PAY THE SALES TAX.

Works the same in Texas. If you buy a car out-of-state, you must register it in Texas. I'm not sure how long you have to do so.
I knew of a couple of state employees who had out-of-state license plates. One got a warning ticket from an employee of the State Highway Dept. The other got his state parking permit removed from his car because he had a Louisiana license plate.
Neither of them got into any trouble other than a wake-up call which prompted them to register their cars in Texas.