is my honda pilot tax deductible

[mrcheap]

i put down 20k as downpayment on my pilot and i am financing the rest.

turbo tax asks how much i paid for the vehicle and the tax i paid on it.

my question is did i pay tax on it? and if i did what do i put down lol

[rocky]

Sales tax is usually paid only on the difference in value between the trade in and the value of the replacement car. Look at the sales form to see

[Honda_boy83]

If you did not trade you paid tax on the whole thing. Look at the sales receipt.

[megatron]

When you finance, you pay tax on the entire purchase regardless of how much you put down and how much you finance. You can get that amount off of your paperwork.

Note: This is different from leasing, where tax is charged monthly on your payment amount.

[whizmo]

It is important to note that states differ widely in how they handle car sales tax, especially when a trade is involved. Some charge the tax on the entire new car price regardless of trade, others on the difference, and some use different rates for cars compared to the general rate and/or cap the total tax to a set amount. Regardless, there should be a line item on the sales contract showing the exact amount.

Also some states allow you to sell your car privately and as long as you buy a the new car within a set period, they let you pay tax on the difference. Most though require that you buy from a dealer to only pay tax on the difference. (This is a special perk given to the car dealers by some state law and is kept in place with generous donations from the car dealers association to the politicians. It has been tested in a couple states and found to be unconstitutional - these are the ones that now allow you to privately sell a car and only pay tax on the difference.)

As others have said, whether you finance or not shouldn't affect the tax you paid. You pay the tax at time of purchase - it may be financed over the life of the car, but you paid it at the time of purchase.

Also, there may be taxes in your license plate fees that are deductable. Excise tax fees rolled into license plate fee are often deductable.

As always, when it comes to tax stuff, it can get complicated, so you may want to consult your tax advisor. Programs like Turbotax make the calculations easier and will explore all the options, but they sometimes don't do a very good job acting as a tax advisor.

- Mark

[TheBluePearl]

Assuming you bought the car for yourself and not a business... the only way the tax you paid is "tax deductible" at the federal level is if you elect to itemize your taxes via sales tax. That's what you paid, a sales tax. You can, if you wish, deduct all sales taxes paid, but then you can't deduct other taxes - which virtually never comes out better, and this is why no one does it.

State taxes on the other hand, no idea, I am sure it depends on the state. In IL, you again can only do it via the sales tax election.

Turbo tax may be asking to see if you paid some giant amount, in case you go with the election option.

[whizmo]

Originally Posted by TheBluePearl

Assuming you bought the car for yourself and not a business... the only way the tax you paid is "tax deductible" at the federal level is if you elect to itemize your taxes via sales tax. That's what you paid, a sales tax. You can, if you wish, deduct all sales taxes paid, but then you can't deduct other taxes - which virtually never comes out better, and this is why no one does it.

Again, tax law is complicated, but I don't think this is correct. The last few years, the IRS, in addition to the option of itemizing all sales tax, has allowed for individuals to take a standard sales tax deduction PLUS deduct the sales tax on "big ticket" items like house, car, boat, airplane, etc. To take any sales tax deduction, you do have to itemize and file Schedule A regardless of how you compute sales tax. I also recall there is a choice between deducting either state/local income taxes or sales tax, but not both. Which is most advantageous will depend on your income taxes and what state you live in.

I also recall the deductability of sales tax is on the chopping block for the 2012 tax year.

- Mark

[TheBluePearl]

Originally Posted by whizmo

Again, tax law is complicated, but I don't think this is correct. The last few years, the IRS, in addition to the option of itemizing all sales tax, has allowed for individuals to take a standard sales tax deduction PLUS deduct the sales tax on "big ticket" items like house, car, boat, airplane, etc. To take any sales tax deduction, you do have to itemize and file Schedule A regardless of how you compute sales tax. I also recall there is a choice between deducting either state/local income taxes or sales tax, but not both. Which is most advantageous will depend on your income taxes and what state you live in.

I also recall the deductability of sales tax is on the chopping block for the 2012 tax year.

- Mark

I think that is kind of what I said - you have to take the SALES tax deduction for this to work. Most people don't do that because it either doesn't work out for them, or it is near-impossible to get together all the necessary paperwork to itemize all your sales tax.

That said, states are all different. And maybe my accountant is wrong. Kind of doubt that though. In order to deduct sales tax from federal taxes, your sales tax receipts would have to outweigh your federal income taxes.

[whizmo]

Originally Posted by TheBluePearl

I think that is kind of what I said - you have to take the SALES tax deduction for this to work. Most people don't do that because it either doesn't work out for them, or it is near-impossible to get together all the necessary paperwork to itemize all your sales tax.

Yes, but clarification - assuming it is to your favor, you don't need to itemize all your sales taxes to take the standard sales tax deduction. You can take a standard sales tax deduction and then add on the big ticket items like a car. It's certainly not difficult to find a single receipt for the car sales tax.

As to whether it is to your advantage, it depends on your local sales tax rate and your income. Low income/ high local sales tax rate, and it will definitely be in your favor to take the sales tax deduction.

Tax stuff..... very few short/simple answers.

- Mark