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Coping in tough times: Save on Car Buying


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The stimulus legislation set up a sales tax deduction for car purchases. Will Floridians get to take that as well as the deduction for state sales taxes?

Congressional leaders may have thought about piggybacking one tax break on top of another. But that’s not what happened.

If you purchase a passenger car or light truck, between Feb. 17, 2009, and Jan. 1, 2010, the new law allows you to tack the amount of the sale tax you pay - within certain limits - onto your standard deduction. That’s for people who don’t take itemized deductions.

But many Floridians do take itemized deductions. One reason is that we have the choice of writing off state sales taxes as an itemized deduction. In other states, unlike Florida, where there is a state income tax, taxpayers there can take state income tax as an itemized deduction.

In the year you buy a vehicle, however, you already are eligible for an extra-large sales tax deduction. That’s because Floridians can use an IRS estimate of what taxpayers spend in sales taxes, and add on actual sales taxes paid on certain major purchases, such as a car or a boat.

You don’t get to do that and take the new deduction, says William Massey, senior tax analyst at the tax and accounting business of Thomson Reuters. You either take the sales tax as an “above the line” add-on to your standard deduction or you take it as an itemized deduction for sales taxes.

Categories: Coping in Tough Times (21)
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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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