If you collect the $4,500. trade in value offered by the federal government is that counted as unearned income or income for that matter?
Also I thought I heard if you buy a car made in USA there is an additional income tax deduction, is that true?
I would hate to jump on the stimulus bus and find out there i a hidden cost down the road.
travelguruette
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You do not collect the 4500. It is deducted from the cost of the car. In this case it is pretax which is a benefit. Normally you take the price of the car, add tax and license and whatever else then subtract the rebate. In this case, it is the price of the car, minus the rebate, then add tax. This means that you are saving on sales tax paid when you buy the car. Any other rebate from the dealer will be after tax. Ex. Dodge is matching the rebate so theirs is after tax. Part of the recovery act that Obama created gives a standard deduction for sales tax for a new car on your income taxes. Normally there is a sales tax deduction if you itemize. In this case, it is a standard deduction for new cars only and you do not have to itemize to take it. In this case, it has positive tax implications.
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This may come as a surprise to you (and some others), but Toyota, Nissan, Honda and Hyundai all have assembly plants in the U.S., staffed by American workers. Those companies created jobs in the U.S. Cash for Clunkers gave a desperately-needed shot in the arm to U.S. car dealers, both foreign and domestic.
Renee
YOU DON'T CLAIM ANYTHING ON YOUR TAX RETURN THAT IS ALL DONE WITH THE STATE AND THE DEALER THE CASH FOR CLUNKERS IS A JOKE THOUGH
I WENT AND I WAS LOOKING AT A FEW CARS AND NOTICED THE PRICES WHERE JACKED UP 3-4 THOUSAND DOLLARS THAN WHAT THE ORIGINAL PRICE WAS SO IN REALITY PROBABLY NOT A BETTER DEAL THAN EVERY ONE THINKS ALSO YOU DO HAVE TO HAVE INSURANCE ON YOUR CURRENT CAR FOR 1 YR BEFORE YOU CAN DO IT
Anonymous
IF you just bought a new car, I'll bet it cost $12K.
A $12K car often incurs $750+ in sales tax.
That's the extra deduction. The sales tax is before the clunker deal since the clunker is just part of your financing.
Bash Limpbutt's Oozing Cyst©
No, it's not income for the buyer. It's treated as a price reduction.
No, there's no additional deduction for buying a car made in the US.