Lost in all the hoopla about the just-extended first-time home buyer tax credit is the fact that the clock is ticking down on another stimulus-created tax break.
In addition to tweaking the home buyer credit, the American Recovery and Reinvestment Act included a deduction for state and local sales and excise taxes paid when you buy a new vehicle. This includes cars, light trucks, motorcycles and even motor homes.
The auto-related deduction became available when the stimulus act became law, meaning you can deduct the sales tax on qualifying vehicle bought between Feb. 17 and Dec. 31.
That gives you just under two months to make use of this deduction. But you know that as the holidays get closer, you're not going to be thinking about taxes -- even though you should!
And if you're thinking about buying a new car, then you definitely need to take a few minutes to find out how this tax deduction could help you save a nice chunk of change.
There are several reasons why I expect the end-of-year sunset date to hold firm.
First, our tax money subsidized an auto fire sale this summer with the Cash for Clunkers program. While that got a lot of takers, it also caught a lot of flack from folks not happy about Uncle Sam taking on a temporary part-time job as a car salesman.
Second, doing more for the auto industry has never been popular with the voting public. Despite the number of workers affected, the fact that most of us drive some sort of vehicle and the need for our country to actually produce something tangible rather than just super size meals, the auto industry bailout never got widespread support.
And even though we taxpayers now are part owners of GM and Chrysler, most of us still are not inclined to do anything that might help them or other car makers, even if it means sacrificing a possible tax break for ourselves.
Plus, helping car manufacturers is just not as politically appealing on Capitol Hill as helping out homeowners for another reason. The home-related tax break had the well-funded real estate industry behind it.
We're no fools here. We know that while some home buyers will benefit, the home builders, real estate agents and their membership groups, implicitly waving big political action committee checks in front of members of Congress, are the big winners.
So if you didn't replace your clunker or didn't have one that met the trade-in and rebate requirements earlier this year and are now thinking about buying a new auto, consider doing so by
It'll probably be your last chance for this iteration of the car sales tax break.
Requirements here, too: Of course, as with every tax break, there are some requirements that must be met in order to claim the auto sales tax deduction on your 2009 return that you file next year.
You must buy a new, not used, vehicle.
If you buy an expensive auto, you won't get a deduction on all your sales tax. You can only deduct the tax paid on up to $49,500 of the vehicle's purchase price.
If you live in a state with no consumer sales tax, such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon, you can deduct other fees or taxes imposed by your state or local government. These levies must be assessed on the purchase of the vehicle and must be based on its sales price or as a per unit fee.
You can take this deduction whether or not you itemize other deductions on your tax return.
If you do itemize, you'll have to do some extra work on your Schedule A, which this year has a separate worksheet for this deduction. If you claim the standard deduction, you can get this write-off by filling out the new Schedule L.
Finally, this tax deduction is not available for folks with higher earnings.
Your deduction amount will be phased out if, as a single filer, your modified adjusted gross income is between $125,000 and $135,000. It phases out for married couples filing jointly who make between $250,000 and $260,000.
NASCAR auto issues: NASCAR has its own auto issues. If you're fan of the sport, chances are you're not a fan of the car that the sport's leaders have forced upon teams, drivers and us spectators for the last few years.
I'm all for safety, but the Car of Tomorrow -- which actually is the Car of Right Now, or CORN as I like to call it -- sacrificed more than it needed to ensure our favorite drivers make it 400-to-500 miles unscathed.
NASCAR apparently is starting to hear the complaints. It is tweaking the autos that will compete next year in its second-tier series.
Even better, word is that Chevrolet and Toyota also are developing new body types that look markedly more like the cars you and I drive.
Now if only the top-tier series would wise up. I have some suggestions for NASCAR and Sprint Cup in my latest motorsports columns for a couple of Randall-Reilly Publishing magazines.
In my Views from the Grandstands piece for the November issue of Truckers News, I explain why C-O-T needs T-U-N-E-U-P.
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- Car sales tax break for no-tax states
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