In IR-2009-30, IRS Commissioner Doug Shulman stated, “For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year. This deduction enables taxpayers to buy now and get cash back later on their tax returns.”
2009 Government Stimulus Package- Purchase a New Vehicle, Get Cash Back
To get the tax return deduction the IRS Commissioner mentioned, individuals must purchase a qualifying vehicle between February 17, 2009 and December 31, 2009. The deduction should be taken on a 2009 federal return filed with the IRS in 2010.
In this article, find out who isn’t eligible for a new car tax break due to another Schedule A deduction. Learn facts about this tax rebate and find out how to access the 2009 version of Form 1040 once it is released.
Car Tax Rebate- Who Isn’t Eligible, Relation to General Sales Tax Deduction on Schedule A
Here are some facts to keep in mind regarding the 2009 car tax break:
- This deduction can only be claimed on 2009 returns. It is not available on 2008 federal income tax returns.
- The IRS noted that even individuals who do not itemize will be eligible for the automobile rebate. If an individual does itemize using Schedule A, there will be space on that form to claim this amount. If the individual does not itemize, the rebate should be added to their standard deduction.
- This deduction may be limited by any general sales tax deduction claimed on Schedule A. See the instructions to Form 1040 and Schedule A for more guidance, once they are published for the 2009 tax year.
- Only taxpayers up to a certain amount of modified adjusted gross income qualify for this economic stimulus measure. See the New Car Tax Rebate-Obama Economic Stimulus Plan article (link below) for more details on exact income thresholds.
Claim New Automobile Tax Deduction on 2009 Federal Return, Form 1040
The 2009 tax return forms should be published by the IRS in late 2009, at which time the exact lines to report this car tax deduction will be visible. To access IRS tax forms, go to irs.gov, click on “Forms and Publications” on the left side of the page, then click on “Form and instruction number (PDF).”
Search for the updated version of the Form 1040 or other federal income tax return form by typing the form number into the search box. If “Product Number” is not the default search parameter, choose it from the drop-down list next to the search box.
Car Tax Deduction & Other Obama Economic Stimulus Plan Articles
The article New Car Tax Rebate- Obama Economic Stimulus Plan discusses more details of the new car tax deduction available to Americans who purchase brand new vehicles in 2009. Find out about weight limits, the price cap, and income thresholds.
Here are other articles related to new car incentives authorized by President Barack Obama in 2009:
Cash for Clunkers Rules – Obama New Car Stimulus
United States Cash for Clunkers Program Details
Resources:
IRS website, irs.gov
American Recovery & Reinvestment Act of 2009
Lena Gott - Lena Gott is a Certified Public Accountant who gives practical financial advice to her readers.
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