Clunker relief

Editor: The “Cash for Clunkers” program for new cars may have
ended, but the IRS wants to remind taxpayers that many people might
overlook another special break available. If you buy a new vehicle
this year, there’s a special federal tax deduction available that
can help you save money, in some cases hundreds of dollars. This
tax break will allow people who buy a new vehicle in 2009 to deduct
the sales and excise taxes they pay when they file their tax return
next year. The tax deduction is available on the 2009 federal tax
return even for those who claim the standard deduction.
The deduction is part of the American Recovery and Reinvestment
Act of 2009 and applies to taxes paid on up to $49,500 of the
purchase price for qualified new cars, light trucks, motorcycles or
motor homes.
Generally, vehicles weighing 8,500 pounds or less qualify. This
means that most new cars and many new trucks will qualify. New
motor homes qualify regardless of weight.
Buyers are entitled to a partial deduction if they earn between
$125,000 and $135,000 ($250,000 and $260,000 for joint filers). The
deduction is eliminated for those who earn over these amounts.
To qualify the vehicle must be new and purchased in 2009 after
Feb. 16 and no later than Dec. 31. There is still time left but the
clock is ticking.
More information is available at www.IRS.gov/recovery.
Terry L. Lemons
Director of Communications
Internal Revenue Service