Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[spydglide]

In most states, you only pay sales tax on the net value after a trade-in, so the sales tax could be very different the same bike with two different deals.

Also note, this is a tax deduction, not a tax credit. If it were a credit, you're income tax due wouild be reduced by the amount of sales tax. However, because it is a deduction, you only get a portion of that amount off your tax bill with the exact amount depending on your marginal tax bracket. For some, they may get no benefit at all if they don't otherwise itemize deductions.

DISCLAIMER: See an attorney or tax professional for actual tax advice. This is my own lame interpretation of how this might work if it ever really happens for anybody which it won't for me because my SERG came in a week early. Never thought I'd be cussin' over my bike showing up before it was due...
 

Hey Rick, In the candy-world, I think this is referred to as Semi-Sweet.  har!  spyder

[RickC]

Hey Rick, In the candy-world, I think this is referred to as Semi-Sweet.  har!  spyder

Or, you could call it mixed emotions...

Kinda like when your mother-in-law drives your new Mercedes over the edge of a cliff!!!

[1abastarsmda]

Damn, I literally bought my latest bike on Dec. 31, 2008!  Ugh..

For 2008, you are able to take either your state and local income tax or the general sales tax deduction plus the tax you paid on certain items (cars, motorcycles, etc).  If you itemize, you may be ahead with the general sales tax plus taxes on those big purchases.  Again, if you traded, it's only on the tax you actually paid on the difference.  If your local tax rate is higher than the general tax rate for the state (such as here in Pittsburgh, the state tax rate is 6% and the local rate in 7%, you can only take the deduction based on the 6% general rate).  So you may have to refigure the tax you paid on your bike at the lower tax rate, like I did.  Going this route, it wasn't a big difference as it only saved me around $79 tax this year.  If you are using a computerized tax program, it will ask you about this.  The only digging you will need to do is to pull out your sales invoice for your bike to see how much tax you paid.  If you happened to buy a car and a bike in 2008, or bought your bike outright with no trade, you could stand to gain a reasonable savings.

I don't know all of the details for 2009.  It will reap bigger savings if you are able to take your other deductions, and the tax paid on your bike is over and above that amount.  Again, you aren't saving the entire amount of the taxes you paid on the bike...just a percentage based on your tax bracket.  Don't start spending next year's refund too quickly.

[metalgrind]

Tax breaks on bikes, get ready for all the new members!

[Bikin' Bob]

If all of you who are buying your 09s in 09 really truly feel sorry for us who got them in 08, then I think you should put your savings together in a pool and split it with us.  Just call it our mini version of a stimulus package - the CVO stimulus package!
 

[RickC]

If all of you who are buying your 09s in 09 really truly feel sorry for us who got them in 08, then I think you should put your savings together in a pool and split it with us.  Just call it our mini version of a stimulus package - the CVO stimulus package!

Now, that there's sounds like an idear, Bob!

[RickC]

So, the announcement below came in an email from my dealer today. Here in the state of Tennessee, we have no state income tax, so we can already deduct sales tax on our federal returns. So, net-net, this has no effect in the state of Tennessee -- or any other state where you have no state income tax and choose to deduct state sales tax. However, for those of you who have a state income tax, this does provide a new deduction.

Just my $0.02...

RickC

Tax Break
For
New Motorcycle Purchasers

The new law allows taxpayers to deduct State and local sales taxes paid on the purchase of a new automobile, including light trucks, SUVs, motorcycles, and motor homes. The tax break phases out starting with taxpayers earning $125,000 per year ($250,000 for joint returns). The deduction is allowed to both those who itemize their deductions as well as to nonitemizers. However, the deduction cannot be taken by a taxpayer who elects to deduct State and local sales taxes in lieu of State and local income taxes.

The Details
Sales tax is generally not a deductible item for individuals. A limited exception allows taxpayers who itemize their deductions to claim either state and local income taxes or state and local general sales taxes, which mainly benefits taxpayers with a state or local sales tax but no income tax.
 Under the new law, buyers can claim an income tax deduction for the sales or excise tax they pay on a vehicle purchase. Key details of this new tax incentive include:
The tax break applies to purchases of passenger cars, minivans, light trucks, motorcycles, and motor homes, but it only applies on $49,500 of the vehicle's price and it only applies to new vehicles.
 
The tax break covers new vehicles purchased between the date of enactment of the 2009 economic stimulus legislation (NOW!!) and the end of 2009.
 
 
You do not have to itemize your deductions to be able to claim the deduction. However, the deduction cannot be taken by a taxpayer who elects to deduct state and local sales taxes in lieu of state and local income taxes.
Only couples making less than $250,000 a year, or individuals making less than $125,000 annually, qualify for the full deduction.

[1abastarsmda]

If I am reading into this correctly, it looks as though that memo is worded incorrectly.  Where is says, "However, the deduction cannot be taken by a taxpayer who elects to deduct State and local sales taxes in lieu of State and local income taxes." I would think it should read just the opposite.  If you are taking the State and local sales taxes, that would include your vehicle purchase tax.  If you choose to use State and local income taxes, then I would believe that is when you cannot claim the vehicle on top of that.  It doesn't make sense the other way, but at the same time, I don't see where that is anything different that what is allowed in 2008.  It's the same thing, except you may be out of luck if you made the purchase between 1/1/09 and 2/17/09. 

[FLSTFI Dave]

If I am reading into this correctly, it looks as though that memo is worded incorrectly.  Where is says, "However, the deduction cannot be taken by a taxpayer who elects to deduct State and local sales taxes in lieu of State and local income taxes." I would think it should read just the opposite.  If you are taking the State and local sales taxes, that would include your vehicle purchase tax.  If you choose to use State and local income taxes, then I would believe that is when you cannot claim the vehicle on top of that.  It doesn't make sense the other way, but at the same time, I don't see where that is anything different that what is allowed in 2008.  It's the same thing, except you may be out of luck if you made the purchase between 1/1/09 and 2/17/09. 

Even though I took bought my bike 18 Feb and the wifes bike in Jan of 09.  This legislation changes nothing for me.

TN had no state income tax so I take the sales tax deduction, plus major purchases.  So I can deduct the tax on both bikes, and could have with out this new legislation.

[DarkEagle]

same here, bought my 09 Labor Day weekend last year... will use $tate $ale$ tax deduction.

[1abastarsmda]

same here, bought my 09 Labor Day weekend last year... will use $tate $ale$ tax deduction.

If they do it like they did for 08, you have 2 choices.  One is there is a table of sales taxes based on your income.  You take that sales tax number and add to it the sales tax from your vehicle purchase.  The other choice is your state income tax.  Whichever is higher will be the one you want to take.  As everyone's situation is different, I don't think it's always going to be the same choice for everyone.  If you have no state income tax, we know what your choice will be.  If you purchased your bike with no trade in, then it's more likely you will go with the sales tax option than someone that traded in and had a lower net tax paid on their purchase. 

[Crusty]

So you only get credit for $49.5K... more incentive for those that have the dealer load up their bike at delivery; an extra "discount" on financed accessories! 

[FLSTFI Dave]

So you only get credit for $49.5K... more incentive for those that have the dealer load up their bike at delivery; an extra "discount" on financed accessories! 

Which is why I ordered all the Harley parts I was planing to get at the time of bike purchas.

[Screamin'Eagle~Sweetie]

gotta love the fact i missed this by 2 months.