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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.

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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... < More >

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance writer for the Sun-Sentinel, has been an award-winning business...< More >

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