New Tax Credits Target Auto & Home Industries
It’s Tax Day. Your taxes are filed and you’re eagerly awaiting your tax refund. Guess what? As you contemplate how you’re going to spend or invest that tax return money, tt’s not too early to start thinking about next year’s taxes.
Next year you may be able eligible for a tax credit if you purchase a new car before December of 2009. Under the Auto Assistance Ownership Amendment sponsored by Senator Barbara Mikulski (D-MD), interest payments on car loans and state sales or excise taxes are deductible for new cars purchased between November 12, 2008 and December 31, 2009. According to Senator Mikulski, the goal of the tax credit is to stimulate jobs in the auto industry by boosting the sale of new cars.
Information from the Tax Institute at H&R Block explains that to qualify, an individual must make less than $125,000 (families must make less than $250,000, but our “families” don’t count as far as the federal government is concerned). The purchase price of the car must be less than $49,500. The car had to be financed – if you paid the full price in cash you won’t be eligible for the tax credit. And the deduction only applies to new vehicles – used vehicle purchases are not eligible for the deduction. However, there is no limit on the number of vehicles that a family may purchase and claim towards this deduction.
You may also be eligible for a tax credit if you bought a home last year. First time home buyers are entitled to a $7500 tax credit if they purchased their home between April 9, 2008 and January 1, 2009. The tax credit does have to be repaid, but it acts as an interest-free loan and repayment doesn’t begin until 2015. However, next year new home owners will be eligible for an $8000 tax credit thanks to the economic stimulus package passed in February. This tax credit does not have to be repaid.
To find out if these tax credits will reduce your tax liability, be sure talk to a tax professional. I’m sharing this information with you purely on a informational basis and it should not be taken as any sort of tax advice.
Great incentives. Spend money while the spending’s good! Seems like money is all about timing. Thanks for the heads up info.
Lisa, don’t you just love that the government’s response to the credit crisis is to encourage Americans to spend more money?