When you think of Italy, what is the first thing that comes to your mind? Chances are that the words that rolled off your tongue (hopefully with a wonderful Italian accent!) are food, food, food! We can talk all we like about the fashion, the art and the music (and indeed, these are the other true joys of the country), but what we really want to experience is the spectacular culinary culture for which Italy is renowned.
Under federal laws, automobile tax deductions in the US are available for two chief kinds of automobiles:
a) The first are those which qualify as clean fuel vehicles and gas-electric hybrid vehicles. Clean fuel vehicles as described by the IRA are those vehicles that are powered by natural gas, liquefied natural gas (LNG), liquefied petroleum gas (LPG) and hydrogen. Gas-electric hybrid vehicles are powered by electricity and any other fuel that contains at least 85% fuel or ether, like E85.
b) The second are those automobiles that are donated to charitable organizations.
As per the federal laws, clean fuel vehicles are eligible to obtain a single tax deduction for up to $2000, while the owners of gas-electric hybrid vehicles are eligible to obtain a single tax credit of up to $4000. Automobile tax deduction is thus very beneficial, as it can cover the entire cost of the vehicle itself, or the cost of the equipment that is used for the storage or delivery of the fuel or the equipment used to exhaust the combusted gases. It is assumed that the cost in any of these heads is not over $2000.
These rules of automobile tax deductions apply for vehicles that were bought in the year 2005. For vehicles bought in 2005 or in any other taxable year, the owners will have to fill out an amended tax return form, i.e. 1040X applicable for that particular year.
There are some more requisites to be eligible for automobile tax deductions:-
- The vehicle must be new and put to personal use. Vehicles bought for resale are disqualified.
- The vehicle must primarily be used in the US.
- The vehicle must be checked for emission and pollution. It must meet federal and state norms.
- The vehicle must have four or more wheels and must ply on the road. Even vehicles on rails are not allowed.
It must be noted that if any of the above eligibility criteria change within three years of purchase, then the taxpayer is liable to pay back some of the amount deducted on tax.
The above rules are applicable up to December 31, 2005. Vehicles bought in 2006 or later may be entitled to a federal income tax credit. This is not absolute though; it is dependent on fuel economy, fuel savings and other factors.
Vehicles that are to be donated as charity are also eligible for tax deductions. These rules are slightly more elaborate. The exact value of the tax deduction depends on the value of the vehicle that the donor claims as the gift, and also on how the charity uses the vehicle. Due to this, it is not possible to know the tax break before buying a vehicle meant for charity. To top it all, there is a $500 limit on the value of the donated vehicle, beyond which more complicated rules are applicable. The donor is entitled to better tax deduction if the charity conducts repairs on the vehicle that markedly increase its commercial value.
Hence, it is better to sell the vehicle off and get some cash in hand rather than get an abysmal tax deduction. Donate an automobile only if you don't wish to spend money maintaining it, or if you are in an exceptionally generous mood.
About the author:
Dr. Maulik is a freelancer and online consultant (Health care Informatics and Ayurveda). He is available for freelance content writing projects. You can view his content writing style across the web. He can write on any subject, nevertheles, healthcare, diet and medical articles are his forte. You can hire him for content or article.
Article Source: http://EzineArticles.com/?expert=Dr._Maulik_Vyas
