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Fun w/ 2016 Taxes - CA Sales Tax Deduction

Tanquen

Member
Feb 17, 2016
304
113
United States
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

Banned
Sep 17, 2015
4,801
2,242
florida.
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.
 
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ItsNotAboutTheMoney

Well-Known Member
Jul 12, 2012
10,537
7,691
Maine
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?
 

Tanquen

Member
Feb 17, 2016
304
113
United States
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.:mad:
 
Last edited:

ItsNotAboutTheMoney

Well-Known Member
Jul 12, 2012
10,537
7,691
Maine
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.:mad:

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

Active Member
May 17, 2014
3,107
3,983
Central Valley
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.
 
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