Can I deduct sales tax paid on a new car purchase on my 2023 tax return?
I just bought a new car last month and the sales tax was no joke - almost $3,500! I'm trying to figure out if I can get any tax benefit from this on my upcoming return. The car is strictly for personal use - just driving to and from my job and running errands on weekends. Nothing business-related at all. I've always taken the standard deduction in the past, but I'm wondering if it might be worth itemizing this year to claim the sales tax from the car purchase? Would that even be allowed since it's for personal use? And if I can deduct it, what form would I need to fill out? I'm starting to gather all my tax documents early this year and want to make sure I don't miss out on any potential deductions. Thanks for any help!
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Molly Chambers
Yes, you can deduct sales tax paid on a car purchase on your 2023 tax return, but there are some important considerations. Sales tax on a car purchase can be deducted when you itemize deductions on Schedule A (Form 1040). This falls under the general sales tax deduction. Even though your car is for personal use including commuting, the sales tax itself is potentially deductible - the purpose of the vehicle doesn't affect the sales tax deduction eligibility. The big question is whether itemizing will benefit you. You'd need your total itemized deductions (including sales tax, mortgage interest, charitable contributions, etc.) to exceed the standard deduction ($13,850 for single filers, $27,700 for married filing jointly in 2023). If you don't have enough other deductions, the standard deduction might still give you more tax benefit. If you do itemize, you'll need to choose between deducting income tax or sales tax - you can't deduct both. Usually, income tax deduction is more beneficial unless you live in a state with no income tax or made large purchases like your car.
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Ian Armstrong
•Thanks for the info! If I do decide to itemize and include the car sales tax, can I also include other sales taxes I paid throughout the year? Or is it just for big purchases? And do I need receipts for everything?
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Molly Chambers
•You have two options for claiming sales tax: either keep all receipts and add up actual sales tax paid for everything throughout the year (including your car), or use the IRS Sales Tax Deduction Calculator to estimate your standard sales tax deduction based on your income and local tax rates, then add the car sales tax on top of that. Most people use the IRS calculator method since it's much easier than tracking every receipt. You should definitely keep the car purchase documentation though. The sales tax information will be on your car purchase agreement, and that's the documentation you'd need if audited.
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Eli Butler
I went through exactly this situation last year with a new SUV purchase. After spinning my wheels trying to figure out if the sales tax was deductible, I found this AI service called https://taxr.ai that analyzed my situation and saved me a bunch of time. I uploaded my car purchase documents and answered a few questions about my other potential deductions. It quickly showed me whether itemizing with the car sales tax would beat my standard deduction (it did!) and guided me through exactly what forms I needed. Super helpful for figuring out whether that $3,000+ in sales tax was actually going to help me or not.
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Marcus Patterson
•How accurate is this taxr.ai thing? I'm always suspicious of these online tax tools. Did it actually save you money compared to what you would've gotten using TurboTax or something?
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Lydia Bailey
•Does it work for other tax situations too? I've got a side business and some investment stuff that gets complicated.
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Eli Butler
•It was surprisingly accurate - I double-checked the numbers with my regular tax software and everything matched up. The difference was that it immediately identified the car sales tax opportunity and showed me the comparison right away, while I would have had to figure that out manually in TurboTax. It definitely handles other tax situations too. I initially tried it for the car sales tax question, but ended up using it for some investment questions I had too. It's particularly good at analyzing documents and giving you straightforward answers rather than making you dig through IRS publications.
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Lydia Bailey
Just wanted to follow up - I gave taxr.ai a try after seeing it mentioned here. Gotta say I'm impressed! I uploaded my car purchase agreement along with some other potential deduction documents, and it immediately showed me that in my case, I'd save about $700 by itemizing rather than taking the standard deduction. The analysis was super clear about how the car sales tax pushed me over the threshold to make itemizing worthwhile. It also pointed out some other deductions I wasn't considering that helped tip the scales. Definitely worth checking out if you're trying to figure out whether that car sales tax will actually benefit you!
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Mateo Warren
If you're having trouble getting through to the IRS to ask about this deduction (which I definitely did), try https://claimyr.com - they'll help you skip the IRS phone queue. You can also see how it works in this video: https://youtu.be/_kiP6q8DX5c I was on hold with the IRS for literally HOURS trying to get clarification about vehicle sales tax deductions, getting disconnected twice. Claimyr got me through to a real person in about 15 minutes who confirmed that yes, the sales tax on a vehicle purchase can be added to your general sales tax deduction if you itemize, even for personal vehicles. Saved me so much frustration!
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Sofia Price
•Wait, how does this even work? The IRS phone system is notoriously impossible to get through. Is this legit or just another scam trying to get access to my tax info?
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Alice Coleman
•Sounds too good to be true. Nobody gets through to the IRS this time of year. I'll believe it when I see it.
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Mateo Warren
•It works by using their system to navigate the IRS phone tree and hold in line for you. When they reach a live agent, they call you and connect you directly to that agent. You don't give them any tax info - they're just helping you skip the hold time. I was skeptical too, but it actually worked. They don't ask for any personal tax information, just your phone number so they can call you once they've got an agent on the line. I was surprised too, but after waiting on hold for 3+ hours myself previously, I was desperate enough to try it.
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Alice Coleman
Ok I have to admit I was wrong about Claimyr. I tried it after posting my skeptical comment, and I actually got through to the IRS in about 20 minutes! The agent confirmed what others here have said about the car sales tax deduction and even pointed me to the specific line on Schedule A where it goes. For what it's worth, she also mentioned that most people don't benefit from this deduction unless they have other significant itemized deductions or live in a state with no income tax. But she walked me through how to calculate whether it would work for my situation. Way better than the hours I spent trying to find clear answers online!
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Owen Jenkins
Something nobody's mentioned yet - if you bought the car in a different state with lower sales tax, you might have paid "use tax" to your home state to make up the difference. That use tax is also deductible as part of your sales tax deduction if you itemize. Just be careful not to double-count if you've already included it somewhere else on your return.
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Lilah Brooks
•Good point! But how would you document that for the IRS? My brother bought a car in Oregon (no sales tax) but had to pay use tax when he registered it in California.
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Owen Jenkins
•The receipt or documentation from your state's DMV or revenue department when you paid the use tax serves as your documentation. Usually when you register an out-of-state vehicle, they give you a receipt showing the use tax paid - that's what you'd keep for your records. In your brother's California case, the CA DMV would have provided documentation when he registered the vehicle and paid the use tax. That's what he'd need to keep to substantiate the deduction if he itemizes.
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Jackson Carter
Gonna add something important - if you financed the car, only the sales tax you actually paid is deductible in 2023, not the total sales tax on the purchase price. Like if the dealer rolled your sales tax into your financing, you technically haven't paid all that tax yet, only the portion in your payments for 2023.
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Kolton Murphy
•That's not right. The full sales tax is deductible in the year of purchase even if you financed the car. The dealer paid the full tax to the state at the time of purchase, so you get the full deduction.
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