How to Deduct Sales Tax on a New Car
- 1). Check your car purchase receipt to determine the total amount of sales tax. In some places, you may have paid both a state sales tax and a local sales tax. Both of these are deductible.
- 2). Report the total amount of new-car sales tax paid on line 5 of Schedule A when you file your income taxes. You can also include the amount of any other sales taxes you paid during the year as part of this deduction.
- 3). Check the 5b box that says "General sales tax" to indicate which deduction you are claiming.
- 4). File your federal income taxes using form 1040. You must use form 1040 because you are claiming an itemized deduction. If you use another form, you cannot claim your new-car sales tax as a deduction.
