One of the things present in the economic stimulus bill passed in May was a deduction for the sales tax and excise tax paid when buying a new car. I received this question from a reader:
Does the 2009 sales tax credit [sic] for
purchasing a 2009 vehicle apply for leased vehicles as well?
Unfortunately, the answer is no. Leased vehicles are not eligible for the tax deduction. If you did purchase a new car (used cars don’t count) in 2009, you can deduct state and local taxes paid, up to $49,500 of the purchase price of a qualifying care. There is an income phase out for this deduction, beginning at $260,000 for those married jointly.
This deduction is available only on your 2009 return, so trying to stick it on an amended 2008 return won’t work, and it won’t count if you buy a car this year, in 2010. You can find out more by visiting the IRS Web site.