Whatta great CON! Cash 4 Clunkers rebates are TAXABLE INCOME!!!

[Ravi]

Well, here we go. It cannot be counted as state income for purposes of income tax.

Exclusion of Vouchers From Income(
1)
FOR PURPOSES OF ALL FEDERAL AND STATE PROGRAMS- A voucher issued under this program or any payment made for such a voucher pursuant to subsection (a)(3) shall not be regarded as income and shall not be regarded as a resource for the month of receipt of the voucher and the following 12 months, for purposes of determining the eligibility of the recipient of the voucher (or the recipient's spouse or other family or household members) for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal or State program.

 

[Ravi]

This thread has taught me a valuable lesson.

You can't cure stupid!

 

[MaggieMae]

Ya KNEW there had to be a catch!

Whoops! Cash For Clunkers Payments Are Taxable!

Some of the drivers that bought new cars through cash for clunkers are learning that it wasn't quite the deal they hoped for. But many of those cashing in on the clunkers program are surprised when they get to the treasurer's office windows. That's because the government's rebate of up to $4500 dollars for every clunker is taxable.

"They didn't realize that would be taxable. A lot of people don't realize that. So they're not happy and kind of surprised when they find that out," Nelson said.

That'll leave a bad taste in some mouths!

I'm gonna need OXYGEN to get through this laugh.... Be back later after I recover..... Can barely type.... They wanna also run our health care..... can't stand it will be back later....

Busted, MM. Your article deals with SALES TAXES, not income. There is NO income tax on the $4500 rebate.

CARS.gov - Car Allowance Rebate System - Helpful Q&As for Consumers - Formerly Referred to as “Cash for Clunkers”

Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer.

That same information is posted in a number of non-government sites.
Love & Kisses, MM

 

[edthecynic]

I can always tell when I have made my point to the CON$.
They stoop to hitting me with neg rep. Thank you MM.

 

[MaggieMae]

$270 is still $270 to me, and it could be a whole lot more if it's enough to put them in another tax bracket!

It's sale tax, not federal income tax. You guys aren't too bright, are you? Oh, wait...you proved that with four years of Bush.

According to the article it could be taxed as income

But it won't.

 

[MaggieMae]

Then what? You're reflexively defending this by trying to make it sound like it's no big deal! It's perfectly okay with you, correct?

Yes.

Why wouldn't it be okay? You pay sales tax on the full purchase price, no matter who pays the purchase price. It's not rocket science...but tell me, why would you want to rip off your state? Most states are hurting for tax revenues these days.

Strawman argument. The GOVERNMENT is ripping YOU off, by not making this rebate non-taxable! Because they didn't think it through.

And by the way, my state doesn't collect any state income tax, and is IN THE BLACK as in, SURPLUS.

Sure, I can just imagine the shrieking from the right if Obama tried to dictate how a state collects on its SALES TAXES!!!

 

[MaggieMae]

Just another "unintended consequence" of ill planned ideas.

No, rather there are an awful lot of really really dumb people out there. I checked to see if my car would qualify (it wouldn't), and it never even occurred to me that if I had traded up, I wouldn't have to pay any SALES TAX.

 

[Oldandtired]

I can always tell when I have made my point to the CON$.
They stoop to hitting me with neg rep. Thank you MM.

Nah...you see...some of us have businesses to run as I do...and some of us have jobs to do...and then there are those like you that simply keep on posting until the rest of us go off to work so we can pay for your entitlements.

Nah...just toying with you. I am sure you either work or you are retired.......just having fun with ya.

 

[MaggieMae]

Idiot, we KNOW it's state and local taxes. So not only do you have the registration, state and local tax on the car, now you also have the taxes on the c4c rebate from the gubmint!

And they want to run our HEALTH CARE next!

And it only took eight replies for one of the Obamaphiles to evoke BOOOOOOOOOSH!!!

The federal government cannot regulate state sales and income tax. I certainly hope you aren't advocating that. If you weren't so afraid to visit cars.gov you'd have known this ahead of time.

You're impossibly stupid and dishonest. IF they made this rebate NOT taxable, that would NOT be regulating state sales and income tax. It would be controlling their own federal program.

Have you nothing but strawmen?

Are you planning on writing a song about strawmen? Because you use that lame excuse for EVERYTHING. You must be gathering material for new lyrics or something.

 

[Care4all]

Well, sometimes it is really good that we have these kind of threads where we go at it like this because it made me do some research and look what I found?

This is important for everyone to read, especially those like Jsanders who did take advantage of this program....

i don't think * will pay state sales taxes for any new car purchased in 2009 as part of the stimulus package, or you get to deduct it all?* separate from cash for clunkers or in addition to cash for clunkers!!! So even those buying a new car this year that did not take advantage of cash for clunkers, will still have a federal tax deduction* for the State taxes they paid on their purchase...and they don't EVEN HAVE TO FILE THE LONG FORM!

3 Money Reasons to Buy a New Car - Tax Deductions, Used CAR Trade-In Vouchers and Electric-Hybrid Credits

3 Money Reasons to Buy a New Car - Tax Deductions, Used CAR Trade-In Vouchers and Electric-Hybrid Credits
written by Andy on Monday

car buyer tax break stimulusIf you are in the market to buy a new car or just looking for a reason to upgrade your existing car, then you could not have picked a better time than now. Apart from local and foreign automakers desperately cutting prices to stay in business or to revive flagging sales, the US government is doling out tons of free stimulus money and tax credits/deductions to entice new car purchases. I have written about the three main programs in detail, but here is a summary and ways you could take advantage of all three of these programs at the same time.

1. New Car State or Local Tax Deduction

This stimulus funded legislation provides tax breaks for new vehicle buyers by giving them a federal-income-tax deduction on local sales and excise taxes. It enables taxpayers to buy now and get cash back later on their 2009 tax returns (filed in 2010). The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of qualified new foreign or domestic cars, SUV's, light trucks, motor homes or motorcycles that weigh no more than 8,500 pounds. You can still buy a qualifying vehicle for more than $49,500 (e.g. an $80,000 BMW), but you will only get a tax deduction up to the specified limit. The deduction is only available to families making less than $260,000 (or $135,000 for single filers). It is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. Further, the new vehicle must be purchased on or after Feb. 17, 2009, and before Jan. 1, 2010, to qualify for the deduction.

Value of Credit: The average new car purchase price the first 11 months of last year was $28,280, and the average used car trade-in value was $15,203, according to data from the National Automobile Dealers Association. States typically tax the difference — $13,077 in this case. So a 5% sales tax rate would be $654, meaning the deduction would reduce taxable income that much. Each state has a different car sales tax, so the deduction will vary by state. For states that do not have state or local taxes on cars, the IRS recently ruled that buyers are entitled to deduct other fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee.

** Search and get multiple quotes for your next new car @ Yahoo! Autos **

2. Cash for Clunkers - Car Allowance Rebate System (CARS)

The Car Allowance Rebate System is a recently approved initiative that will help you pay for a new, more fuel efficient car or truck from a participating dealer when you trade in a less fuel efficient car or truck. Under this program, auto buyers will be entitled to discounts/vouchers of $3,500 or $4,500, based on the following criteria.

- Tade-in cars must get no more than 18 miles per gallon, have been built in 1984 or after, and have been owned and insured by the purchaser for at least a year. A consumer could then get a $3,500 voucher toward a car that got at least 22 mpg. The value of the voucher will increase to $4,500 if the new car is 10 mpg higher than the trade-in. Consumers will also be able to use the vouchers toward the five-year lease of a vehicle.

- A $3,500 voucher can go to a small light-duty truck that gets at least 18 mpg and is two mpg higher than the trade-in. A 4,500 voucher will be issued for a truck with a five mpg improvement.

- A $3,500 voucher will be issued for large light-duty trucks that get at least 15 mpg and are one mpg higher than the trade-in. A $4,500 voucher will be issued for a truck with a two mpg improvement.

- No trade in value: Because the old vehicle will be destroyed, the credit is given instead of the regular trade-in value — not in addition to it — though some dealers might compensate customers for the vehicles scrap value.

The vouchers under this program will be issued electronically to dealers almost immediately upon the point of sale, so the credit should be available at purchase. This program has limited funding of $1 billon (enough for about 250,000 consumers) and will likely expire by Nov 1, if not sooner. For more details, see the official government site cars.gov; and to determine if your car meets the fuel efficient requirements go to FuelEconomy.gov

Get your best new car quote from Yahoo! Autos

3. Green Energy Car Credits

President Obama’s stimulus bill provides a modified credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer's vehicles after the manufacturer has sold at least 200,000 vehicles.

This credit is in addition to the Hybrid Auto Credit for vehicles purchased or placed into service after December 31, 2005 which may be eligible for a federal income tax credit of up to $3,400 (see IRS site for list of qualifying vehicles), Credit amounts begin to phase out for a given manufacturer once it has sold over 60,000 eligible vehicles.

Can I use the above credits together?

Yes. You can use the above credits together. For example, you can trade in your qualifying old car under the cash-for-clunkers program to get the discount voucher and also claim a deduction for the sales and excise taxes you pay on the new car. Here is a hypothetical example from a recent Vanguard article on this topic:

Johnny is currently driving a 1995 Dodge Caravan that has an estimated fuel economy rating of 17 miles per gallon. Because it has 90,000 miles and is in only fair condition, it has a trade-in value of $350, according to Kelley Blue Book. However, if he trades it for a 2009 Nissan Versa, which has an estimated 29 miles per gallon fuel economy rating, he would qualify for a $4,500 voucher because the new car's rating is at least 10 miles per gallon more than the Caravan's. That would reduce the cost of the new car from its manufacturer's suggested retail price of $10,710 to $6,210.

In addition, because he earns less than $125,000 a year, Johnny can deduct the sales tax he pays on the vehicle from his federal income taxes next year. Finally, Johnny would save money on gasoline each week because of the greater fuel efficiency of his new car.

To get all the benefits you must still meet each of the individual program requirements and not claim the same tax break or deduction twice. Further, only one credit of each type may be issued for joint registered owners of a single eligible trade-in vehicle.

What's the difference between a tax deduction and a credit?

Many of the tax breaks on new cars are either deductions or credits, and it is important to understand the difference. A tax deduction reduces the amount of income for which you are taxed. For example, if your taxable income were $50,000, a $2,000 deduction would reduce it to $48,000. So, you would pay taxes on an income of $48,000 instead of $50,000. This means your actual savings would be a fraction of the $2,000 deduction. A tax credit reduces the total amount of income tax you owe. So, if you owed $10,000 in federal income tax, a $2,000 credit would reduce the amount you owed to $8,000. With a credit, your actual savings would be $2,000

 

[Oldandtired]

Just another "unintended consequence" of ill planned ideas.

No, rather there are an awful lot of really really dumb people out there. I checked to see if my car would qualify (it wouldn't), and it never even occurred to me that if I had traded up, I wouldn't have to pay any SALES TAX.

Just a side not...I got a kick out of those greedy individuals that bought old cars off of craigs list and then use them to buy new cars with the rebate....only to find out that you need to prove insurance for the car was under your name for the preceding 12 months.

Serves them right trying to capitalize on a government run program!

 

[MaggieMae]

No matter what this administration throws at the American people, Ravi is going to be good with it.

And the Cons would complain if Obama started farting gold dust, and using the resulting precious metal to pay off the national debt.

You people have done nothing but nay-say, bitch and moan since day one.

The libs do think that Obama farts gold dust.

Obama has given a lot of ammuntion for the conservatives to bitch

And even more to defend. That's why I'm here.

 

[Ravi]

Thank you Care! I didn't know that about the sales tax deduction and we bought two new cars this year.

Beautiful!

I can't wait until MM and Gunny come back and admit they were WRONG!!!

 

[Oldandtired]

And the Cons would complain if Obama started farting gold dust, and using the resulting precious metal to pay off the national debt.

You people have done nothing but nay-say, bitch and moan since day one.

The libs do think that Obama farts gold dust.

Obama has given a lot of ammuntion for the conservatives to bitch

And even more to defend. That's why I'm here.

It is tough to defend what Obama himself admits he knows nothing about....like healthcare.

 

[MaggieMae]

A rebate is what you didn't have to spend to get something..........retroactively. So when you get the rebate, it's a price break. So it isn't taxable, is it? Or is it, because money changed hands?

I think the main mistake was destroying the clunkers. This means the states get no money on the potential registrations because the cars were destroyed. It effectively takes durable goods out of the system, and ancillary churn like insurance and lower entry into the potential market. So they take a value added item and make it into scrap. Makes no sense.

But the scrap dealers profited. They strip those cars of anything resaleable, like batteries, as well as any copper. Besides, registration on older vehicles is much less than new ones, right? So that part is probably a wash. Same with insurance.

 

[MaggieMae]

common sense should tell one you will be taxed on everything.

If cons had common sense Palin wouldn't be their pick for president.

Wow, I must have missed the boat. Palin is running against Obama in 2012?

She's the fave, at least according to Rasmussen.

 

[Oldandtired]

A rebate is what you didn't have to spend to get something..........retroactively. So when you get the rebate, it's a price break. So it isn't taxable, is it? Or is it, because money changed hands?

I think the main mistake was destroying the clunkers. This means the states get no money on the potential registrations because the cars were destroyed. It effectively takes durable goods out of the system, and ancillary churn like insurance and lower entry into the potential market. So they take a value added item and make it into scrap. Makes no sense.

But the scrap dealers profited. They strip those cars of anything resaleable, like batteries, as well as any copper. Besides, registration on older vehicles is much less than new ones, right? So that part is probably a wash. Same with insurance.

Those "clunkers" were means of transportation for those that could not afford a new car.
The inventory of affordable used cars was diminsihed by tens of thousands....incrqasing the price of a used car to those that certainly can not afford an increase in price.

Next, we will need a program to offer the less financially stable a free or cheap used car so they can get to work.

 

[MaggieMae]

We have a wonderful ponzi scheme here. One that had to be intentional. I wonder what percentage of the 3000 million that went into this, winds up being revenue whether it be state, local or federal?

They take OUR tax dollars, "spread it around" then tax us again on it!

I'm just confused as to why you're complaining about keeping some private car dealerships healthy and adding to state coffers at the same time.

Free Enterprise and States Rights. Aren't those the two hallmarks of any good conservative?

 

[Immanuel]

I have not read anything from about the fourth page of this on, but:

From what I saw in the article it is only sales tax that is being charged and that makes sense. Why shouldn't the states collect sales tax on the full value of the sale?

I'm actually surprised that it is not also Income Taxable as technically it is income and quite truthfully, I don't think that someone who bought under the Cash for Clunkers program would have a right to bitch. You just don't look a gift horse in the mouth.

Immie

 

[MaggieMae]

Some dealers gave matching rebates and the purchaser still had to pay sales tax on the dealers rebate. Rebates have ALWAYS worked like that.

For example, I bought a 100 pack of CDs for $19.99. They came with a $20.00 rebate from the store that sold them. I still had to pay sales tax on the $19.99.
Only CON$ would try to exaggerate a typical sales tax transaction into paying income taxes at the highest rate on a rebate.

MATCHING rebates, I can understand. This money from the government, that is OURS to start with, should have been in the form of a GRANT so states couldn't do the ol' double bite.

That's all I'm asserting. It gives the appearance of a con job.

Yes....excellent point. You are paying a sales tax on money that was originally tax money.

But some people simply want to ignore that part and simply mention the few on baords such as this that believed AND repeated that it was an "income tax".....

Those that capitalized on the plan are paying a tax on their tax dollars....sort of.

No big deal..but certainly unusual.

Yes, it's still a tax, and yes, it was unusual, passed as part of the 2009 Supplemental Appropriations (aka Omnibus bill). But it also passed by a vote of 91-5 in the Senate.