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February 12, 2021
Question

I financed a used vehicle in 2020. No money down. Does this qualify under the major purchase?

  • February 12, 2021
  • 2 replies
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I am just confused since I didn't necessarily pay it off.

2 replies

Employee
February 12, 2021

Did you pay sales tax?   The only thing you can enter about the car purchase is the sales tax you paid.  Sales tax is an itemized deduction.   It will not have any effect at all unless you have enough other itemized deductions like mortgage interest, medical expenses, etc, to exceed your standard deduction.

 

 

SALES TAX

You can enter the sales tax you paid for the car you purchased in 2020 by going to Federal>Deductions and Credits>Estimates and Other Taxes Paid> Sales Tax.  You will be asked if you paid sales tax on a major purchase, and you will be able to enter the sales tax you paid for your new vehicle. 

Sales tax is an itemized deduction.  If your state has a state income tax, you have to choose between using the deduction for your state tax paid OR the sales tax deduction, whichever is higher.  The TT process will suggest one or the other as you prepare your return.

“Major purchases” that you can enter for the sales tax deduction include:

Motor Vehicles (cars, trucks, motor homes, RV’s, sport utility vehicles and off-road vehicles

Aircraft or boats

Mobile homes

Manufactured housing

Building materials for major home improvements

You cannot deduct: furniture, jewelry, home electronics such as TV’s or computers

https://ttlc.intuit.com/questions/1901222-which-deduction-should-i-choose-sales-tax-or-income-tax

https://ttlc.intuit.com/questions/2566624-how-much-sales-tax-did-i-pay-last-year

https://ttlc.intuit.com/questions/3148443-how-do-you-define-major-purchase-or-major-item-for-the-sales-tax-deduction

https://ttlc.intuit.com/questions/1900791-how-do-i-find-my-local-sales-tax

https://ttlc.intuit.com/questions/2566624-how-much-sales-tax-did-i-pay-last-year

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
February 12, 2021

Did you actually buy the vehicle, that is, engage in a transaction that in your state resulted in you owing sales tax? If so, then, yes, this is a major purchase.

 

What TurboTax is looking for is the amount of sales tax that you paid for the vehicle. 

 

See what the IRS says,

"However, if you paid sales tax on a motor vehicle at a rate higher than the general sales tax, you can deduct only the amount of the tax that you would have paid at the general sales tax rate on that vehicle. Include any state and local general sales taxes paid for a leased motor vehicle." See the Instructions for Schedule A.

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