I have qualified for a loan and am purchasing a new Audi this week for $34,000 after trade in and rebates; I am a DEPENDENT making about $7,000 gross in 2009. In indiana sales tax is 7 percent.
Thanks for the comment
I am 20 years old and graduating next year from a good school. Already have a job lined up from my internship. My mother co-signed the loan.
How and Will Obama’s new car sales tax deduction help me?
30
Apr
Net Advisor
April 30, 2010 at 8:05 am
Wait, you make $7,000 a year and you are buying a $34,000 car?
Your estimated payments excluding tax and license will be about $680 a month.
Your income is $583 a month BEFORE taxes ($7,000/12).
You will have no money left over for food, gas, maintenance, school, clothing, rent, any bills etc.
Sorry, but you can’t afford the car. I don’t think you will even be approved for a loan unless someone else is guaranteeing payments.
I don’t think Obama is going to be any help to you here.
edit:
I figured there had to be a cosigner. I still would not do it. I would save the money, buy a lessor expensive car. I understand exactly what you are thinking. Most all guys want to do this, esp at your age, but it really is not the best investment decision.
Saving $2,380 off your income taxes is really irrelevant when you are in the bottom tax bracket and already have standard deductions you get without buying a thing. I have not found anything that says this is a $1.00 for $1.00 tax deduction either.
*** You STILL will have to pay the sales tax when you buy the car. ***
You are still taking on the large debt on a depreciating asset.
Keep in mind that the job is not guaranteed, and you will spend years paying for the car prob 5 right, and they will have released several new models during this time, and you will start to think your car is old.
If you plan on keeping the car for 5-10 years and don’t care about age of car, maintenance costs, etc, then buying a car is one thing. If you like newer cars, 2-3 year leasing terms might be an option.
I still wound not encumber this expense giving your situation. This does not make finance sense. I think you are just focusing on the vehicle and overlooking financial matters.
123456789
April 30, 2010 at 8:17 am
You can deduct sales tax of the car. See here for all of the details:
http://www.irs.gov/newsroom/article/0,,id=204519,00.html
I concur with Net Advisor’s opinion otherwise.
Judy
April 30, 2010 at 8:38 am
Your mom cosigned. I assume she is also going to make the payments and support you until you finish school, since you obviously can’t on $7000 gross income.
The sales tax deduction for the car will probably save you the $130 in federal income tax you’d otherwise owe on your $7000 income as a dependent. Since you are a dependent, you do know you aren’t eligible for the $800 Pay to Work credit?
Ralph T
April 30, 2010 at 9:01 am
You will take the sales tax deduction on your income tax return.
It will depend on IF you can take the deduction without itemizing like they allowed for real estate taxes last year.
I can’t see how you qualified for a $34,000.00 loan on a $7,000.00 annual income.
If you are under the age of 18,you cannot legally sign any contracts.