For 2009 Purchase Only: New Car Sales and Excise Tax Deduction

If you purchased a new vehicle in 2009, but actually paid the sales or excise tax from the purchase of it in 2010, then we can help you get any deductions available to you.

Sales or excise tax is often charged to customers when they purchase a new car.

In 2009, the IRS provided a deduction for these taxes when you purchased a new (not for used or pre-owned) car. Some people bought their new car in 2009 but for one reason or another didn’t pay the sales or excise tax until sometime in 2010.

The requirements for this deduction are simple:

• You bought a new (not used or pre-owned) car between February 17, 2009, and December 31, 2009.
• You paid the sales tax or excise tax from the purchase sometime in 2010.

TurboTax will determine if the deduction is limited/reduced by:

• Your modified AGI is over $125,000 ($250,000 if married filing jointly) or
• Completely eliminated if your modified AGI is over $135,0000 ($260,000 if married filing jointly).

Some states, including Alaska, Delaware, Hawaii, Montana, New Hampshire, and Oregon, have other fees rather than sales or excise taxes on new vehicles.

For these states, you can still deduct these fees or taxes paid if they were based on the sales price or were a per-unit fee.

Here's how to get to the New Car Sale Tax screens in TurboTax:

1. Select the Federal Taxes tab. 
2. Select Deductions & Credits.
3. Click through until you get to the screen that reads “How Do You Want to Go Through Deductions & Credits?” 
4. Select the “Explore on My Own” link.
5. Scroll down to the section titled “Cars and Other Things You Own”.
6. Next to “New Car Tax”, select “Start” or "Update".