How to Deduct Automobile Sales Tax
One of the itemized deductions offered by the Internal Revenue Service is the state and local sales tax deduction. Usually, people prefer to claim the state and local income tax deduction. However, if you have a large purchase such as a car, your state and local sales taxes may exceed your income taxes, making it more beneficial for you to claim the sales tax deduction. In addition, in order to claim the deduction, you must itemize your deductions.
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Instructions
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Consult your receipts from your car purchase to determine the amount of sales taxes paid.
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Report the sales tax paid on line 5 of Schedule A. This amount will be added to your other itemized deductions.
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Check box 5b to indicate that you are claiming state and local sales taxes rather state and local income taxes.
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Total your itemized deductions and report this amount on line 29 of Schedule A. You must also report this total on line 40 of your form 1040 tax return. You will subtract this amount from your adjusted gross income to find your total taxable income.
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Tips & Warnings
If you claim your car sales taxes, you can also include any other sales taxes you paid during that year for which you kept the receipts.
