Buy a Car, Get a Break!
December 24, 2009
As the last year of the decade winds down, don’t forget your tax planning. And if same includes consideration of buying a new car, get on it, because the rules are likely to change in 2010.
Those of you who buy a qualifying new car this year (after February 16, to be exact) can deduct the state or local sales or excise taxes related to the first $49,500 of cost (which should cover most car purchase amounts). The IRS instructs that qualifying motor vehicles include new passenger autos, light trucks, motorcycles and motor homes.
Those of you who itemize, and even those who take the standard deduction can benefit from this tax break. But joint filers with modified adjusted gross incomes between $250,000 and $260,000 will suffer a reduced deduction. And folks with higher incomes won’t qualify at all.
If you do move forward on this, and use the standard deduction, when you get around to filing your 2009 return, tackle Schedule L–yet another new form devised by the Revenooers.
And as you consider year end charitable donations, don’t lose sight of a few rules in this area:
- A rule which will expire at the end of 2009 pertains to older owners (over 70-1/2 years of age) of IRAs. It says that if you transfer up to $100,000 to an eligible charity, and do so in the proper manner, you don’t have to include the IRA amount as an element of your adjusted gross income (nor do you, of course, get a charitable deduction for the gift).
- Many folks give clothing and household goods to charities each year. Remember that in order to be deductible, such items generally must be in “good used condition or better,” admonishes the IRS. However, a clothing or household item for which you claim a deduction of over $500 does not have to meet this standard if you include a “qualified appraisal” of the item with your return.
- And remember that in order to deduct any charitable amount of money, regardless of amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include cancelled checks, bank or credit union statements, and credit card statements. And with regard to credit cards, don’t forget that donations charged on your card before the end of 2009 count as 2009 donations, even though your don’t actually pay the bill until 2010!
What a deal.
Merry Christmas to you all!
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, and welcomes comments below.