Sales Tax and Fees Deduction for Vehicle Purchases

If you are thinking about a new car, truck, SUV, or minvan, this is the time to purchase it. In addition to the Honda Model Clearance Sale at Bernardi and the Cash for Clunkers program that will be implemented next month, you may also be entitled to deduct state and local sales and excise taxes paid on the purchase on your 2009 tax return.

Internal Revenue Service Commissioner Doug Shulman said, “This deduction enables taxpayers to buy now and get cash back later on their tax returns.” You must purchase after February 16, 2009, and before January 1, 2010, to qualify for the deduction.

The special deduction is available when you file your 2009 tax return - regardless of whether you itemize deductions on Schedule A.

The deduction is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle. The deduction is phased out for joint filers with modified adjusted gross income between $250,000 and $260,000 and other taxpayers with modified AGI between $125,000 and $135,000.

Taxpayers who make qualifying new vehicle purchase this year can estimate their deduction with the help of IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k on Worksheet 10 take into account purchases above the $49,500 limit, as well as the income phase-outs.

Related Items:
IR-2009-60, Special Tax Break on New Car Purchases Available in States With No Sales Tax
IR-2009-30, Special Tax Break Available for New Car Purchases This Year
Flyers, posters and marketing products
Seven Facts about the New Sales Tax Deduction
The American Recovery and Reinvestment Act of 2009: Information Center

Obama signed Cash for Clunkers bill

President Barack Obama signed into law the Department of Transportation "Cash for Clunkers" bill on June 24. His signature kicks off a 30-day period in which the Transportation Department will prepare regulations for the program. The National Automobile Dealers Association is advising dealers to wait until the rules are out late next month before participating.

Bernardi Honda will participate in the program as soon as adequate information is available to ensure rebate commitments to customers can be guaranteed by Bernardi.

The timing of the program's implementation will ensure customers receive the best deal on a new Honda car, minivan, truck, or SUV since it will overlap with American Honda's Model Year End Clearance when maximum discounts are offered to customers.

Additional information on the Cash for Clunkers program can be found at http://fueleconomy.gov/feg/cars.shtml

Cash for Clunkers - Available July 1

Outlined below are the guidelines for the "Cash for Clunkers" program that will be launched on July 1, 2009. The program enables consumers to trade in older less efficient vehicles in exchange for a voucher that can be used towards the purchase of a new car or truck. Vouchers are worth either $3500 or $4500 depending on the fuel economy of the vehicle that is turned in and the new vehicle that is acquired. The program will be available for vehicles sold between July 1, 2009 and November 1, 2009.

The Department of Transportation (DOT) is setting up a website - http://www.cars.gov/ - dedicated to the program.

The program is outlined below along with commonly asked questions.

Check back on July 1 for information on the BernardiHonda.com "Cash for Clunkers Tool". It will enable you to select your trade from a list of older vehicles and then instantly identify which government credit you are eligible for based upon the new Honda that you are interested in buying.

GUIDELINES: Trade-In Qualification

• Gets no more than 18 miles per gallon (mpg)
• Was manufactured after 1984
• Is in drivable condition
• Was continuously insured to you for the last 12 months
• If a work truck, was manufactured before 2002
  

GUIDELINES: New Vehicle Qualification

Cars

• New previously unregistered car
• Maximum Value to Qualify $45,000
• Minimum MPG to qualify: 22
• $3,500 Voucher - New car that gets at least 4 mpg higher than your trade-in
• $4,500 Voucher - New car that gets at least 10 mpg higher than your trade-in.

Small Light-duty Pick-up trucks, MiniVans, SUVs (Category 1 Truck) ^****

• New previously unregistered light-duty truck
• Minimum MPG to qualify: 18
• $3,500 Voucher - New vehicle that gets at least 2 mpg higher^* than your trade-in.
• $4,500 Voucher - New vehicle that gets at least 5 mpg higher^* than your trade-in.

Large Light-duty Pick-up trucks and Vans (Category 2 Truck: 6,000 to 8,500 lbs)

• New previously unregistered pick-up truck or van
• Minimum MPG to qualify: 15
• $3,500 Voucher - New truck that gets at least 1 mpg higher^* than your trade-in.
• $4,500 Voucher - New truck that gets at least 2 mpg higher^* than your trade-in.

Work trucks (Category 3 Truck: 8,500 and 10,000 pounds)

• New previously unregistered work truck

$3,500 Voucher - any new work truck

---

COMMON QUESTIONS

Can I receive a credit if I trade an SUV in for a more fuel efficient car?
Yes. You can trade an SUV in for a more fuel efficient car. The law does not specifiy that a car must be traded in for the purchase of a car or an SUV must be traded in for the purchase of an SUV. The law does, however, specify that the purchase of a class 2 truck such as the Ridgeline may have only a class 2 or class 3 truck as a trade-in.

Will I be eligible for the credit if I lease rather than purchase or finance my new
vehicle?
Yes. You are eligiable for the credit regardless of the method of payment used in purchasing your new vehicle.

Will I receive the fair market value of my car, as listed in KBB, Black Book, etc
in addition to the credit?
No. The law requires your trade-in vehicle to be destroyed. Therefore, the value you negotiate with the dealer for your trade-in vehicle isnot likely to exceed its scrap value. The law requires the dealer to disclose to you an estimate of the scrap value of your trade-in vehicle.

Does this program apply only to American Cars?
No. To be eligible for the credit, the trade may be imported or American and the new vehicle can be imported or american made.

I can't find the MPG rating for my work truck. What do I do?
Some trucks, such as work trucks, were never rated for fuel economy. For these trucks, age is the only criterion for determining whether they are eligible trade-in vehicles. If you have one of these trucks, it must be from model year 2001 or earlier, but also the date of manufacture must be less than 25 years from the date you trade it in, to be an eligible trade-in vehicle. Other restrictions may also apply.

I just traded my old car in June. Am I eligible for the credit?
No. The program starts on July 1. Prior purchases are not eligible.

Can I trade-in more than one "clunker" for a single new vehicle so I can get multiple
credits
No. You are eligible for no more than one credit for each new car purchase.

Can I buy a really cheap older car and use it as a trade to get a rebate?
No. The trade must be registered to and insured by the person trading the car for at least the last 12 months.

Can I turn in an old car and take the credit myself rather than buying a new car?
No. The credit must be applied as partial payment to the purchase of a new vehicle.

Is the credit considered income by the state or federal government?
No. The credit is not considered as income by the state or federal government. THus, it is not taxable and it can not be used to determine benefits or assistance.

How does the program work?

• Use the "Cash for Clunkers" tool on http://www.bernardihonda.com/ (available on of July 1) to determine if your trade qualifies for a credit. If you are not sure, please call Bernardi Honda at 800-254-0013 and ask for a "Cash for Clunkers" program specialist.
• When you visit Bernardi to make your purchase, drive your trade (it must be operable) and bring the title, registration and
  insurance papers showing continuous registration and insurance coverage of your trade for the past full year.
• Bernardi will reduce the selling or lease price of the new Honda vehicle by the amount of the credit for which you are eligible. You don't have to wait for the government to take action!
• Bernardi Honda will handle the submission of all required paperwork to NHTSA
• NHTSA will audit the paperwork to verify that your sales transaction meets the requirements for a credit
• About 10 days after paperwork submission, the NHTSA will issue a financial credit to Bernardi — assuming all program requirements have been met.

Woman’s Seminar on Car Purchasing

On June 9th Bernardi Honda held its second Woman’s Seminar on Car Purchasing at its dealership on
Worcester Street in Natick. The seminar was held to dispel the image of the woman
not be a key participant in the car purchasing process. In fact 75% of the vehicle
purchases in the United States are made by women. This seminar was designed to empower
woman with the knowledge necessary to successfully make a vehicle purchase.

Lemon Laws
Guest Speaker, Paula Fleming Vice President of Communications for the Better Business
Bureau (BBB) began the evening with important criteria pertaining to Lemon Laws.
The documentation given included helpful tips and phone numbers consumers can contact
at the BBB for information on area businesses. She also provided information to
help identify dealerships with proven records of excellent customer service –as
well as those who fail to make the grade.

Dealership Selection
Heather MacKinnon joined us from DealerRater.com and provided our guests with the
best way to find a consumer review for a dealership utilizing the internet. She
addressed specific ways to search for a reputable dealer on-line by using Google.com
and their reviews will pop up automatically. Adding that a consumer review is most
important to get an accurate read of how you will be treated and that Bernardi Auto
Group’s dealerships have a great reputation for a pleasant experience with Sales
or Service.

Credit and Financing
The next speaker was Karen Fisher, Business Manager for Bernardi Auto Group. She
was able to answer several questions from the audience regarding what great vs.
not so great credit entails. They were also given a handout that included a pie
chart with the compilation of a Fico score and what the ranges mean. She continued
on with the benefits of leasing a vehicle and the “extras” that are helpful with
your purchase, such as extended warranties and GAP insurance.

Service
Christine Kristoff-Cote Service Director at Bernardi Audi brought her 20 years of
service expertise to the table. She was able to squash common fears of engine lights
and provided guidance for the best maintenance on any vehicle. The tire gauges and
tread depth measuring tools were terrific props for the ladies to learn how to use
properly and they were encouraged to take them home at the end evening.

Throughout the evening their were many great raffle prizes. The grand prize was a free one month membership at Curves Fitness of Natick. Curves also provided each attendee with fitness
magazines and guest passes.

Dinner was provided by Fresh City of Framingham.

We would like to thank the following local businesses for their giveaway gifts:
Beauty Way Cosmetics and Hair Products, Curves Fitness of Natick, DeliMax Pizzeria,
Dolphin Restaurant, Five Crows Hand Crafts, Salon Paradiso, Stephanie Sandler of
Strands and the Vitamin Shoppe of Framingham.

Special thanks go to Sallie Longeri, Tom Parks, Jim Blaney, John Shuberth, Paul
Dibasio and Robbie Walker of Bernardi Auto Group for their help with the evening.

The next Woman's Seminar is scheduled for October. Please call Kristin Cullinane at 774 290-1423.

Dollars For Clunkers Goes to Senate

On June 9th, the House approved their HR-2751 Cash for Clunkers bill that aims to boost new auto sales by encouraging consumers to trade in their gas-guzzling cars and trucks for vouchers worth up to $4,500. The vouchers can be used to buy or lease a new more fuel-efficient vehicle.

Meanwhile, an almost identical bill seems to have S-1200 Cash for Clunkers has stalled in the Senate. To help break the stalemate, a coalition of senators led by Dianne Feinstein (D-Calif.), who sponsored the original and much tougher Senate version of the Cash for Clunkers bill, introduced an alternative measure that would require greater fuel efficiency than the House bill.

To qualify for a voucher under the alternative Senate plan, consumers would have to trade in a car rated at 17 mpg or less and purchase a new car that gets at least 24 mpg. Consumers could receive a $2,500 voucher for a new car that gets at least 7 mpg more than their old car, $3,500 for a new car with a 10 mpg gain in fuel efficiency, and $4,500 for one with an increase of 13 mpg or more.

Source: About.com

Cash for Clunkers - Passed By House

Yesterday the House passed a $4 billion bill to motivate consumers to purchase new vehicles by subsidizng their purchase. The "Cash for Clunkers" bill (H.R. 2751) would give vouchers to consumers worth up to $4,500 when they trade in a "gas guzzler" and buy a new car that is more fuel efficient. The legislation now goes to the Senate. President Obama has said he supports such a measure.

The House version of the bill applies to vehicles that average less than 18 mpg combined city and highway driving. $3,500 could be applied to a new light truck or van that was more fuel efficient than the old one by at least 4 mpg or $4,500 if the new vehicle is 10 mpg more efficient.

Vehicles that have not been insured for the past year or that are older than 25 years are not eligible to be traded in for vouchers.

The bill would require dealers to accept the trade-in automobiles on behalf of the U.S. government and arrange for the transfer of any trade-ins to an entity that will dispose of the car by crushing or shredding it. The trade-in may not be, sold, leased, exchanged, or otherwise disposed. The entity responsible for crushing the automobile may sell parts from the car other than the engine block and drive train

You can determine the MPG rating of your vehicle as well as that of a vehicle of interest by visiting http://www.fueleconomy.gov/feg/findacar.htm

As soon as the bill is enacted Bernardi Honda will provide details on the size voucher that your vehicle will be eligable for when trading for the new Honda vehicle of interest to you.

House OKs $4 Billion Cash for Clunkers (CNNMoney)

Bernardi Honda Service Coupons

Bernardi Honda's Service Specials and Service Coupons are a great way for you to keep your car running like new while saving yourself a lot of money. Our service coupons will help you save money on Honda auto repairs, Honda maintenance work and quality Honda auto parts.

Our current service coupons can be viewed at http://www.bernardihonda.com/MiscPage and offer drivers:

• FREE Air Conditioning Service
• Oil change and Lube with FREE multi-point inspection for $29.95
• $99 of on Timing Belt Replacment
• $10 off on In-cabin Micro-Filter Replacment
• $10 off on Minor Maintenance
• $20 off on Intermediate Maintenance
• $30 off Major Maintenance and FREE Car Rental

We also offer a number of detailing coupons which can be viewed at http://www.bernardihonda.com/MiscPage_18

To use a coupon, schedule your service appointment at http://www.bernardihonda.com/ServiceApptForm. Print the service coupons and bring them with you to your service at Bernardi Honda. We are located at 960 Worcester Street, Route 9 East between Speen Street and Route 27, in Natick MA.

Sales Tax Deduction for New Vehicle Purchases

In an effort to stimulate new car sales, the Internal Revenue Service announced that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.

The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.

The amount of the deduction 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.

To be eligable, the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction.

The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.