First off, Happy New Year to all..! With the new year here, I'm already thinking about my 2012 taxes as last year was a big year for me with my first home purchase and the purchase of my "new" V8VS. I'm no tax expert and hate to ask these questions for opinions.

I'm just a regular human being and didn't purchase my V8VS in full with cash. I did a reasonable amount down and financed the rest. In reviewing my vehicle purchase contract, it lists a substantial amount in California (San Diego) sales tax for a car that is $$$.

In reviewing the IRS 1040 Schedule A Instructions, since I will be itemizing my deductions this year, I read and noticed the following for Line 5, State and Local General Sales Taxes, Actual Expenses:

So if I'm understanding this correctly, I'll get to itemize my V8VS sales tax as a deduction? If so, this will be huge plus my 2012 Ducati purchase , mortgage interest, state tax, etc... My itemized deductions will be substantial compared to the Standard Deduction.

Any insight, opinions, or advice is appreciated.

I'm hoping a nice big return this year for even more toys or accessories.. Looking forward to what 2013 has to bring...

 

Three words for you. "Alternative Minimum Tax". Depending on your income it may apply to you. Pay close attention to avoid a call from your favorite (?) uncle later.

 

I'd be very surprised if you can write off the sales tax on any car/motorcycle purchase but, I'm not familiar with CA tax laws. Can't do it in NC....... Might not even matter if as stated above you hit the AMT income threshold.

 

I was able to deduct the FL sales tax on the purchase of my V8V from my Federal Income Tax return. Nothing illegal about taking a deduction that you are fully entitled to.

 

From the sounds of your purchase history (new AM + Ducati) you probably fall under the category of will be paying an AMT. Consult with your tax advisor for clarification.

 

Dumb question, what if you are above the AMT amount? Can you apply for it?

 

lol, i gave up trying to research and understanding some things and have a scheduled appointment with a local high-rated/recommended tax advisor. thanks for the initial insight and will mention the AMT.

 

Whenever I start reading about the tax codes and what not it turns french and I get lost. I hate the fact that I have to trust someone (and pay a premium) with my finances because I don't feel it should be so hard or complex...

 

I am interested to hear more... I do not think you can deduct Sales Tax on a car in California. I think the vehicle needs to weigh more than 6500 lbs or something like that before it is being considered a business vehicle and you can start deducting it for tax purposes. That is , what I have heard , why a few years ago people were buying these Hummers as if money was going out of fashion.

 

This is interesting topic, under state tax laws property taxes including that of home or motor vehicle can be considerations, depending on state, and for what purposes that property represents. For example real property tax on primary residence vs otherwise or vehicle under business expense etc...

 

My vehicle is completely for personal use and not for business, so I'm not sure that applies to me. Per the IRS' website on Sales Tax Deduction:

I will be filing a Schedule A, and claiming local sales taxes with the purchase of my AM and other toys far exceeds my state local income tax.

As an added bonus, I'm active in the military and my total salary is substantially less than my actual take home as half my pay is non-taxable allowances (housing, sustenance, etc.) When I file, I will have paid substantial taxes on what is a smaller income, so I might not be subject to AMT (according to a few "test" runs on the IRS AMT Assistant Tool).

References:
http://militarypay.defense.gov/pay/
http://www.irs.gov/Businesses/Small-...or-Individuals

 

Elude... You may be "eluding" the Tax Man on this one!! Good for you!!

 

I've used Turbo Tax for years (not this year due to new biz opportunity/situation and a considerably more complicated) and nowhere is there a place to deduct sales tax on your Federal Income Tax return. You sure it's legal?

 

Personal property taxes on automobiles are deductible in NC, sales tax on automobiles is not.

 

Glad to see someone else did what I'm planning on doing. I'm assuming you itemized your deductions on a 1040 Schedule A?