For those of you that bought a truck in 2004 and are in a state that charges sales tax, be sure to go over your taxes very carefully.

For the first time since 1984, the Federal return lets you deduct your local sales tax! For those in states with no income tax, but a sales tax, this is a HUGE WIN. For those of us in high-sales-tax states, it could be a win.

This issue has slipped by LOTS of people. If you want to buy a truck, buy it this year so as to push your sales tax bill up. For those in the 30% tax bracket with other substantial purchases this year, the tax benefits mean you can shave 30% off the price of the truck.

Please do not take my word for it. Do a Google search on "sales tax deduction".

PS: if I save you a few grand on your tax bill feel free to send me a case of good beer.

Here's how I figured it in MI. IIRC you can either deduct your "states sales tax" or your "states income tax".

For someone who files a joint return and had (as an example) $100,000 of income. In MI they would pay about 4% income tax on that amount which is $4000. If they bought a truck for $35,000 they would pay 6% state sales tax which is $2100.

So.......to make it worthwhile (in MI) to claim only the "sales tax" one would have to buy the truck AND spend another $32,000 in goods that you would pay sales tax on (and have receipts) in order to match the $4000 income tax deduction.

I don't see it helping many here. If I'm wrong I'd be glad to hear it :)

Rob

Perhaps I should have posted more information, but tax planning is wickedly
complex.

Say you live in Nevada. No income tax, but sales tax. That means you
get $ back from the Feds -- no way around it. Same goes for 10 other
states.

Or say you live in NY or CA, both with high sales tax, about 8%. Do a 401K, Roth IRA, MSA, and all the other tricks. You almost certainly get $ back.

For those in the 30% tax bracket with other substantial purchases this year, the tax benefits mean you can shave 30% off the price of the truck.




I agree that it is a good thing, and that people need to be sure and take it into consideration, but I am not sure where you are getting that you can shave 30% off the price of the truck??

You are only getting the TAX as a credit, not the whole truck.....maybe you meant 30% off the tax?

I have a feeling this is gonna turn into a looooooong thread!

I agree that it is a good thing, and that people need to be sure and take it into consideration, but I am not sure where you are getting that you can shave 30% off the price of the truck??

You are only getting the TAX as a credit, not the whole truck.....maybe you meant 30% off the tax?

Yes, you are correct. I was typing too fast, it is 30% of the tax, not the
truck price.

In my case, I live in California, bought a truck, camper and new roof for the
house this year, along with all the other stuff that goes along with having two small kids, a house and a normal life. My tax savings DOES approach 1/3 the cost of the truck.... which is why I know about this change to the tax law.

I just dump all this stuff on the Accountant. He know all the deductions and laws. That why I pay him to deal with this crap.

Also, this only applies to those that itemize their deductions, not those that take the standard deduction.

I just dump all this stuff on the Accountant. He know all the deductions and laws. That why I pay him to deal with this crap.

You can talk to your accountant, but he cannot put you in a time machine and go back to last year to buy a truck.

Just like other grouping functions of the tax code, this one requires you to
figure out which year to buy a truck. There is, at most, a few thousand dollars at stake for each tax filer. Not a lot of $, but nothing to throw away, either.

Realize this is general sales tax issue, so your tires, TTS box, Edge, rims, NOS, giant stereo and even your underwear matter. Since trucks are a big ticket item, it can get the average guy to think about the issue.

I have talked with tax preparers, accountants, and a few others that should be paying attention. All of them missed it.

Here in wyoming we don't have a state income tax, so I always add up sales tax on capitol investments like trucks and equipment.

I do this also. I also make it my point to know the laws to check my accountant.



I just dump all this stuff on the Accountant. He know all the deductions and laws. That why I pay him to deal with this crap.

So will this work the same way it used to where the sales tax is assumed to be a % of income but we can choose to itemize when a big purchase is or do we need to save the receipts period. Most won't get much this year if we have to save them all since it wasn't in the news till about Sept/Oct this year, most missed the first 3 quarters of receipts (or at least I did)

Here is the standardized table for smaller purhases, you can still add larger purchases such as cars, planes, etc...

http://www.irs.treas.gov/pub/irs-pdf/p600.pdf

DuckHunterInTN,

Good post! Handy info!

So if my taxable monthly expenses are $1000 ~ 8.5% here in TN, that's $1,020 in tax credit that I wouldn't have otherwise had. Wish I'd have known that when I set up my W4 last year. That way ol' Uncle Sam wouldn't have gotten a 0% interest loan from me this year.

Thanks for the heads-up! Hopefully my tax program would have caught this anyway, but now I'll make doubly-sure that it does.

Since last you can write off the whole truck in 1 year instead of the standard 5 years. It has to be over 6,000 GVW and cost between 25,000 and 100,000 dollars. Why bother with just the sales tax.

Since last you can write off the whole truck in 1 year instead of the standard 5 years. It has to be over 6,000 GVW and cost between 25,000 and 100,000 dollars. Why bother with just the sales tax.



anyone have a link to this information. I use my truck about 40% personal 60% business. Someone told me that in order to use the above write off it had to be titled to your business. Maybe it is time to pay up and us an accountant

You can only "write off" (via depreciation) the whole truck in one year if you have enough business income to cover it. Business income only, no W2 income. You can also write off any expenses such as fuel, filters, oil, insurance, etc. If you’re audited and you try to claim goodies such as lift kits, brush guards, cool tires and wheels, etc. You better be able to prove that you needed that stuff. Also you can't write off your personal use. If the truck is your only vehicle, you better only try to claim about 75%. If you claim 100%, you better be able to prove that you never ever used the vehicle for anything but business. The IRS is going to be watching that this year.

Here are some of the things I am writing off this year;

Sales tax
Interest on one of my credit cards. I use it for business only.
My PDA.
My Cell phone.
My notebook computer.
My Kahr .40, Glock .40, holsters, ammo, targets and range time.
DVD burner and blank DVD’s
Cable internet.
10% of my housing expense
90% of my truck expense
Medical insurance
Payments to my IRA
And I’m sure I’ll find more stuff.

Standard deduction for 2004 is $9,700. For a lot of people, the personal sales tax deduction may be of little value if you are a renter or own you home outright. If you itemize all your legal deductions and they don't equal $9,700 including the reinstated sales tax deduction you won't gain any added benefit and the standard deduction will still be your best hand. That's the way I read the information available. Let me know if you feel I'm off base.

You people that are writing off a truck, do you own your own business?

Standard deduction for 2004 is $9,700. For a lot of people, the personal sales tax deduction may be of little value if you are a renter or own you home outright. If you itemize all your legal deductions and they don't equal $9,700 including the reinstated sales tax deduction you won't gain any added benefit and the standard deduction will still be your best hand. That's the way I read the information available. Let me know if you feel I'm off base.
Yes, I am reading it the same way. It won't do you any good unless you itemize.

In order to depreciate the truck you have to own a business or be a 1099 sub contractor. If you’re a W2 employee, you can deduct miles that are for business use that you are not reimbursed for.

I am a 1099 sub contractor, so I can deduct depreciation. I can also prove that 90% of the vehicle use is for business purposes. So I can deduct 90% of the vehicle expenses such as insurance, fuel, filters, etc.

So if you have to own a business or be a contract employee, what makes these trucks any different than any other vehicle? Or, is it just the sales tax issue? My wife and I both bought new vehicles this year, but I doubt the sales tax from both would be greater than our standard deduction. And if you did itemize and write off the sales tax, how could they let you do that if you did not actually pay all the sales tax yet? (ie. financed the vehicle).

Even though you financed the vehicle, the tax has been paid. Assuming you financed 100% of the vehicle, the dealership would have gotten a check for the amount of the vehicle plus the tax, license etc.. The dealership then had to pay that tax to the state. So, you paid the tax.

It must be different here than in other states, because here even when you finance the truck, you still pay the sales tax when you get your plates at the county assessor's office. Heck I have mine right here for the taxes. 1002 for sales tax, 730 for plates. Damn plates cost too much...

So if you have to own a business or be a contract employee, what makes these trucks any different than any other vehicle?
If you own your business and the GVW is 6000 or greater you can write off the whole truck the year you purchased it, instead of over several years. Which is what we did with McRat's truck last year:cool2: .. He has weird fiscal year

Got it, don't know what I was thinkin. Gotta start that walleye charter business this year!

Note: I could be wrong, but I believe that the over 6000lb vehicle must be used more than 50% for business.

Got it, don't know what I was thinkin. Gotta start that walleye charter business this year!
I have a very good friend that hounds me about starting a small business...this post is making me think hard about it.