A tax credit for a new car purchase is one of the best ways to save money in 2009. Oddly, for all the discussion of the government stimulus package in the news, the tax credit for buying a new auto has been kept pretty quiet. This is kind of odd, since it’s one of the pieces of the legislation that can directly benefit a lot of people this year.
Basically, if you buy a new car in 2009 or at least the right chunk of 2009, then you can deduct the amount you pay in taxes on the car from your federal taxes for the year of 2009. This can be a pretty sizable amount of money, depending on where you live and what kind of car you buy.
As you know the auto industry is a major source of jobs for Americans, but it’s in dire straights right now. Most of the major American car companies are on the verge of going under, so the government is using the tax credit for new auto purchases to help buoy them up. This being the government, though, there are a few catches.
First off, you need to complete or have completed your new car purchase between February 17, 2009 and December 31, 2009. The deal has to be completed between those times, not just started. If you’re before or after those dates, you’re out of luck, unless they do it again next year.
Your credit for a new car purchase covers the first $49,500 of any car, light truck, motor cycle or RV you buy. If your purchase price exceeds that amount, the credit will only apply to the first $49,500 of the cost; after that, you’re on your own. It also has to be a new car, fresh from the dealership, not just new to you.
Unsurprisingly, the tax credit is only available to people who make money below a certain threshold. Fortunately, the threshold is set high enough that the vast majority of us will qualify. Basically, if you make more than $125,000 as a single person or more than $260,000 for a couple, then you’re going to miss out on the credit.
Your tax credit is applied to your 2010 tax return, allowing you to deduct the amount of tax you spent on the car from your income. This is an above the line deduction, so you can still use it even if you don’t itemize.
While getting a tax break for a new car is a nice perk, it’s not really a big enough benefit to justifying buying a new car just for that reason. You may well be able to find a low mileage used vehicle that doesn’t qualify for the tax benefit, that is still a better deal, so you need to consider that when deciding to make a purchase. That said, if you were definitely planning on buying a brand new car anyway, it’s a nice bonus.
The amount that the tax credit for new car purchase will benefit you will vary from state to state, with people living in states having the highest sales taxes benefiting the most. But if you buy a new car in 2009, make sure to take advantage of this opportunity to save a little, or even a lot of, money.
By: Shane Smith. If you are looking for landscape or backyard lights then check out: http://makevoltz.com
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