2011 Tax Deductions for Cars

Written by Brady    Thursday, 02 February 2012 17:28

It is officially tax season and that means it is time to get all of your tax documents together and start working on your tax return. By now most people should have received most of their W2's, 1099's and everything else needed to properly prepare your tax returns. We checked the Turbo Tax Online Deduction tool to see what car related items are deductible. The items covered below are for personal expense, not business expenses such as buying a car and mileage. Note this is not considered to be tax advice and any questions should be directed to a tax professional.

Deductible:
Vehicle Registration Fees - If you itemize your deductions and live in a qualifying state you are able to deduct Vehicle Registration Fees. According to TurboTax.com the states that are eligible include:
Alabama , Arizona, California, Colorado, Georgia, Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, South Carolina, Washington, Wyoming.

Energy-Efficient Vehicles - If you purchased an energy-efficient vehicle in 2011 you may be eligible for a tax credit (note this is not a deduction).  The IRS has a specific list of vehicles that are eligible. The key change this year is that hybrids are no longer eligible. Most of the eligible vehicles are electric plug-in style. The credit is for 10% of the purchase price up to $2500.

Energy-Efficient Vehicle Charging Station - If you installed an energy-efficient vehicle charging station you may be eligible for a tax credit. This is handled by filing IRS Form 8911 - Alternative Fuel Vehicle Refueling Property Credit.

Recreational Vehicle State and Local Taxes - If you own a recreational vehicle you may be eligible to deduct any state and local taxes that you pay on that vehicle if they are imposed.

Not Deductible:
Car Loan Interest - Unfortunately a standard car loan does not allow for the interest paid to be deducted.