Five Tax Saving Tips - Auto Purchase

As if price slashing and 0% interest rates weren't enough to spur you on to buy a new car, the US government is now offering incentives to help you make your decision now.

One of the provisions of the recently-passed American Recovery and Reinvestment Act of 2009 is a tax deduction for the purchase of a new qualified vehicle. Keep the following thoughts in mind when searching for your new car:

1. You can deduct state and local sales taxes on up to $49,500 of the purchase of a qualified vehicle. This could mean a tax break of almost $750 if your state tax rate is 6% and you are in the 25% tax bracket.

2. Qualified vehicles not only include new cars, light trucks and motorcycles, but motor homes as well.

3. You can take advantage of this tax deduction on your 2009 tax return as long as you purchase the new vehicle before January 1, 2010.

4. Even those who do not itemize deductions can receive this benefit.

5. Deductions begin to phase out if you are single and earn more than $150,000 or if you and your spouse jointly earn more than $250,000.

If your monthly car maintenance expenses have been continuing to increase, 2009 might be the best time to buy that new car of your dream.

Also keep in mind that you can take advantage of proceeds from a Home Equity Line of Credit (HELOC) to pay for major purchases. In addition to interest on mortgages up to $1 million, taxpayers can deduct interest on HELOCs up to $100,000.

Learn more how you can save money with free financial planning tips at Comprehensive Financial Planning.

Gary provides Guardian Angel protection for your financial issues by ensuring that your current advisers and working for you. Supported by over 30 years of financial experience, an MBA in finance from Northwestern University and CFP and ChFC certifications; Gary is an expert at discovering your hidden financial fears and providing solutions.