Taxes often make up a big portion of purchase considerations. This article will describe how to calculate taxes on a new truck whether for business or personal purposes. Areas covered include ways a business can deduct depreciation and leasing costs or receive credits on fuel-efficient vehicles.
Things You'll Need
- Pen Paper Calculator or computer
Calculating Upfront and Local Taxes
The first step is the easiest. The first tax you will pay for the purchase of a vehicle is the sales tax. This applies to most states. Simply take the purchase price and multiply by the percentage that is the sales-tax rate. So if the sales tax is 6 percent, multiply the purchase price by .06. Different counties or cities may have different sales-tax rates even within the same state. To find out, call your state treasurer or check your state treasurer's website.
Another tax you will often see is the Gas-Guzzler Tax. Depending on the size of your truck, it may have a Gas-Guzzler tax. These taxes change continuously, so look up the vehicle on the manufacturer's website or the IRS website to see if the tax applies.
The state you live in may also have usage taxes. Check with your state treasurer to see if a yearly usage tax applies to your purchase. If so, you will be charged a percentage of your state income taxes for your vehicle. This is uncommon.
Most states have a registration tax. This is usually done by vehicle size and weight. Check with your local Department of Motor Vehicles for more details.
Federal Tax Credits and Deductions
First, check with the IRS or your vehicle manufacturer about whether the truck is eligible for a fuel-efficiency tax credit. The IRS publishes a list of new cars eligible for the credit each year. Hybrid and diesel vehicles often receive this credit.
Calculate the depreciation on your vehicle. Depreciation rules change from year to year, so always check with the IRS either by calling or by checking their website at www.irs.gov. You can usually deduct the amount of depreciation from your revenues. Calculate depreciation by dividing the price of the truck by its expected life span.
Finally, check with the IRS to find out if you are eligible to receive a deduction on your federal taxes for paying your state's sales tax. If so, simply deduct this amount as well.
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