Fun w/ 2016 Taxes - CA Sales Tax Deduction

[Tanquen]

I’m using TurboTax and having a large purchase other than the house for the first time unsure if or how to use the sales tax deduction.

So I go through and get the Energy-Efficient Vehicle deduction, yay! Then I get to the sales tax section and it says don’t bother as TurboTax thinks the income deduction will be better for me. But knowing I had paid the cars sizable sales tax I went ahead and put in the CA sales tax info and the federal refund amount went up. TurboTax then says the sales tax deduction will give me the maximum refund.

TurboTax says that you must chose to use the sales tax or income tax deduction but I paid more in income tax than sales, is it double dipping?

 

[kort677]

you don't get both a credit for ca income taxes paid and a sales tax deduction. what that means is that if you claim a federal credit for state taxes paid you cannot use the sales tax deduction. the sales tax deduction was put into the tax code to even things out for people who live in states that do not have income taxes.

 

[ItsNotAboutTheMoney]

I’m using TurboTax and having a large purchase other than the house for the first time unsure if or how to use the sales tax deduction.

So I go through and get the Energy-Efficient Vehicle deduction, yay! Then I get to the sales tax section and it says don’t bother as TurboTax thinks the income deduction will be better for me. But knowing I had paid the cars sizable sales tax I went ahead and put in the CA sales tax info and the federal refund amount went up. TurboTax then says the sales tax deduction will give me the maximum refund.

TurboTax says that you must chose to use the sales tax or income tax deduction but I paid more in income tax than sales, is it double dipping?

There's a table-based method for calculating sales taxes, and motor vehicle sales taxes are on top of that.
So, perhaps the standard sales tax plus your Tesla sales tax is greater than your state income tax?

 

[mblakele]

That sounds ok to me, but I am not a tax professional. Don't you get some level of free support when you pay for TurboTax?

 

[Tanquen]

So, perhaps the standard sales tax plus your Tesla sales tax is greater than your state income tax?

I think that is it, as it’s a Federal deduction on the Federal return I was thinking of my Federal income tax not the state. It just feels odd to see the Federal Refund amount to keep going up. I could have easily just skipped it.

Well, it will go down again when I find out where to enter the $2500 CA rebate.

Why is this so hard?


Is my CVRP rebate taxable?


CSE does not issue a 1099 for your rebate. We cannot offer tax advice of any kind, and advise you to contact a certified public accountant or tax professional regarding the taxability of the CVRP rebate.

 

[mblakele]

I'm still not a tax professional, but it sounds to me like you shouldn't declare the CVRP as income: Is he CVRP taxable? - TurboTax Support

Do rebates need to be claimed as income? - TurboTax Support seems relevant too.

 

[kort677]

I'm still not a tax professional, but it sounds to me like you shouldn't declare the CVRP as income: Is he CVRP taxable? - TurboTax Support

Do rebates need to be claimed as income? - TurboTax Support seems relevant too.

the federal tax credit is not a rebate. it is just that a tax credit.

 

[ItsNotAboutTheMoney]

I think that is it, as it’s a Federal deduction on the Federal return I was thinking of my Federal income tax not the state. It just feels odd to see the Federal Refund amount to keep going up. I could have easily just skipped it.

Well, it will go down again when I find out where to enter the $2500 CA rebate.

Why is this so hard?


Is my CVRP rebate taxable?

CSE does not issue a 1099 for your rebate. We cannot offer tax advice of any kind, and advise you to contact a certified public accountant or tax professional regarding the taxability of the CVRP rebate.

I am not a tax professional, but for cash rebates, the IRS says:
"Cash rebates. A cash rebate you receive from a dealer or manufacturer of an item you buy isn’t income, but you must reduce your basis by the amount of the rebate."

The "reduce your basis" refers to claims of the car as an expense.

I would guess that they'd treat this rebate the same. There are some references to CARB lawyers saying in 2011 that it wasn't taxable.

 

[cpa]

I am not a tax professional, but for cash rebates, the IRS says:
"Cash rebates. A cash rebate you receive from a dealer or manufacturer of an item you buy isn’t income, but you must reduce your basis by the amount of the rebate."

The "reduce your basis" refers to claims of the car as an expense.

I would guess that they'd treat this rebate the same. There are some references to CARB lawyers saying in 2011 that it wasn't taxable.

Yes, the rebate is not taxable income. Yes, the rebate reduces your basis. No, a rebate does not refer to claims of the car as an expense. Basis is the figure in income taxation that is used to calculate your gain or loss upon disposition. It is also used to calculate depreciation or amortization for assets that properly must be depreciated or amortized.