Tax Deduction for New Car Bad Credit Car Loans
by Steve Cypher on Wednesday, October 21st, 2009The Internal Revenue Service is reminding all new car buyers of the special sales tax deduction for car purchases available through the end of the year even to consumers with a bad credit car loan
Time is running out
At Auto Credit Express, for nearly twenty years we have been helping consumers with bad credit reestablish their car credit and raise their credit scores by financing a new or newer pre-owned vehicle with a bad credit car loan. As a borrower, one of the things that you have control over to make the overall buying process less expensive is to take advantage of the current sales and excise tax deduction under the American Recovery & Reinvestment Act of 2009 available to all buyers (including bad credit car loan buyers) of new vehicles purchased before January 1st, 2010.
Here is the information supplied to us by the Internal Revenue Service:
WASHINGTON — 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, a video 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.
The Bottom Line
If you’re planning on financing your next new vehicle with a bad credit car loan, you can take advantage of the ARRA deduction by buying a new car before the January 1, 2010 deadline, making your purchase even more affordable – both in terms of the delivered price as well as the finance charges you’ll incur over the life of the bad credit car loan.
For more information about car loans for people with bad credit, we invite you to visit our web site at: www.autocreditexpress.com. Here you will find calculators to help you determine your budget as well as a loan resource center that can help answer your questions. If you need additional assistance, our toll free number is listed at the bottom of every page.
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