Money Talks, So Should You

Q&A: Will I get anything back on my tax return for buying a car?

Mitch Marsden
by Mitch Marsden , NAPFA

There is no tax credit in 2012 for most cars. What credit may exist for you applies to only new “qualifying fuel cell” vehicles purchased. It has to be new and of a specific make and model. Other tax credits were in existence in the past for advanced lean burn technology vehicles, qualified hybrid vehicles and qualified alternative fuel vehicles, but these credits expired with the close of 2010, unless the vehicle was purchased in 2010 but placed in service in 2011.

For a list of the qualifying vehicles and more details on the Alternative Motor Vehicle credit that does exist, check out 2011 Model Year Hybrid VehiclesQualified Hybrid Vehicles, or Form 8910, Alternative Motor Vehicle Credit, forms and instructions. This credit does phase out for taxpayers depending on the sales of each manufacturer, so if you are interested and are lucky to catch a model that is still eligible for the credit, it may be better to make the purchase sooner than later.

READ: What questions should I ask when buying a car? 

The IRS has granted that consumers can generally accept the manufacturer’s certification that a new vehicle qualifies for the credit. Therefore, if you are buying a new qualifying car, you can depend on the manufacturer’s certification of this to you at the time of purchase.

If you don’t have this certification when you purchase your car, you should expect not to receive anything back in the form of a credit or deduction on your tax return, unless other tax law changes occur to reinstate, extend or otherwise modify the current treatment.

--

Tagline Logo

Mitch Marsden is a member of the National Association of Personal Financial Advisors (NAPFA), a fee-only professional association and a Dimespring knowledge partner.