Taxes: undoubtedly one of the most stressful, yet inevitable parts of life. It’s a complicated process with a web of deductions and credits, often becoming one big mess. Among the labyrinth of unknown deductions, did you know that there are a slew of car-based deductions that you could take advantage of? Depending on your car, you could even get a tidy refund. It’s as good a time as any to get your hands on a new or used vehicle.
Registration Deduction
It may not be like this in every state, but Hoosiers have the opportunity to deduct their vehicle registration. Follow the Form 1040 to add the deduction.
Moving Deduction
If you’ve moved a significantly far distance, you may be able to deduct some of the mileage you put into moving. Essentially, if you’ve moved for work, you can get a deduction for any moving costs you paid out of pocket. If you were given a moving reimbursement, you can only deduct what you spent out of that reimbursement range. Here’s a quick guide that can help you figure out if you qualify for the deduction.
Donation Deduction
If you’re thinking about buying a new car and ditching your current one, consider donating it to a local charity. Sure, you may want to trade it in to shave some dollars off the price of your new car, but if it isn’t worth a whole lot, you may be better off donating it and claiming a tax deduction. The actual deduction will depend on what the vehicle is actually used for. If the charity sells it, your deduction will be limited to the proceeds the charity receives from it. If the charity actually uses it or sells it to a needy individual for under the fair market value, you can deduct the fair market value. This is also done on the Form 1040. Check out this guide for more information on donating your car.
Refund
Tax season is inevitable, along with all the money either leaving or coming into your pocket. Maybe, if you play your cards right with all the possible deductions, you can find yourself with a pocket full of refund money. This wouldn’t be a bad time to get that new vehicle you’ve had your eye on. You can apply your refund to a down payment on new (or used) car, ridding yourself of the extra stress of saving up for it. Plus, you may even qualify for a deduction on next year’s taxes by buying a brand new car this year!