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Special 2009 Tax Break for New Car Purchases

July 27, 2009

If you’ve been thinking of buying that new car you’ve always wanted, this year, the IRS is offering to make that possibility a reality, by making it somewhat more affordable. A special deduction will be available on your 2009 individual tax return, next year, whether you itemize deductions or not.

If you purchase a new passenger vehicle between February 16, 2009 and before January 1, 2010, you may qualify for the deduction. There are income limitations after which a phase-out will occur. For example, if your modified adjusted gross income is between $125,000 and $135,000 for individual filers, or between $250,000 and $260,000 for joint filers, the deduction may be discounted or disallowed.

No matter whether you purchase a new car, light truck, motor home or motorcycle, this deduction will be limited to the state and local sales and excise taxes paid on up to $49,500 of the original purchase price of the vehicle. According to the IRS, this deduction will enable you to buy now and get cash back later on your 2009 tax return.

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* A Refund Anticipation Loan (RAL) is a loan secured by your tax refund and is offered by Republic Bank & Trust Company to qualifying applicants, and is available to Electronic Refund Check or Deposit (ERC or ERD) customers. If approved for a RAL, a Finance Charge and Credit Investigation Fee will apply. RAL proceeds are available within 24 hours of IRS acceptance. A Tax Refund Administration Fee and other fees may apply for the ERC or ERD, and will be deducted from the customer’s tax refund. Visit your tax preparer to learn about all filing and product options, including obtaining your refund without a loan and at no additional cost. **Special expires 5/2/12.