Proposed Bill to give New car buyers tax break

[Mr. Wyndham]

Originally Posted by DeathChill

You do realized Honda still pays taxes in the US, still employs people in the US and still has headquarters in the US, right?

And? We can pick out specific companies...but the fact is GM, Ford, and Chrysler have more interest in the US's well-being than any other automaker. In turn, they were born here, innovate here, and they effect nearly 15 million jobs. We'd better darn well have a higher interest in them than Honda. This bill should reflect that....but of course it doesn't.

And Blur, good post.

[chevydude26]

so hold up will you get the 7500 dollars in a tax refund if you don't pay any taxes

[DGthe3]

Originally Posted by Dragoneye

And? We can pick out specific companies...but the fact is GM, Ford, and Chrysler have more interest in the US's well-being than any other automaker. In turn, they were born here, innovate here, and they effect nearly 15 million jobs. We'd better darn well have a higher interest in them than Honda. This bill should reflect that....but of course it doesn't.

And Blur, good post.

To add to that, I read about a year and a half ago that GM and Ford were two of the 4 biggest spenders for research and development in the United States (Microsoft and Pfizer were the other two). And while there are a few R&D centers for foreign automakers that employ engineers and technicians over here, they are vastly outnumbered by their counterparts in Michigan alone.

[Inspector 17]

Originally Posted by The_Blur

Here it is.

The vehicle must be used in the United States. That is probably the stupidest regulation ever placed in a bill. Does Congressman Rogers expect it to be used by US citizens in Sweden?

The bill is in effect until 1 January 2010. Buy the car in 2009. That means that the down payment must be paid in 2009. Order early.

The vehicle must be a passenger vehicle or light truck. This apparently excludes large trucks, SUVs, and sport cars. Evidently, it only includes economy cars and trucks that fit 3 to 7 people.

I would like some understanding of the use of "depreciation" as an exception. Basically, explain this: "property of a character subject to the allowance for depreciation or amortization."

I am not completely sure, but generally there are provisions like this to prevent automobiles used for business purposes to be claimed twice (once for this discount and then again when claiming the depreciation). Just my two cents.

[dayvedayve]

Originally Posted by chevydude26

so hold up will you get the 7500 dollars in a tax refund if you don't pay any taxes

Not a "refund" or "rebate" or "credit". It is a "deduction".

example
If you make $50,000 a year and you are taxed on $30,000 normally, you would only be taxed on $22,500 if you qualify for the $7500, $25,000 if you qualify for the $5000, and so on.

If your taxable income is zero you get nothing. You cannot have a negative taxable income.

[kdbolt70]

offhand question, I apologize if this is verbose. Does your tax bracket get determined based on your gross income? or after your deductions?

Also, roughly what would this roughly equate to in dollars, having a $7500 tax deduction?

[dayvedayve]

Your tax is based on what is left after deductions That is the "taxable income." Your "tax bracket" is then determined by that figure. Deductions come off gross income. Credits come off what you owe in taxes. Credits get the full dollar amount. Deductions only save you a percentage.

For example.... If your tax bracket is 15% You will save about $1100 on taxes.
If you are at 10% then it will be around $750

Another thing that could happen is that you could be in a lower tax bracket than normal if you were within the range of the deduction before. The lower your taxable income the lower your tax bracket.

[dayvedayve]

I really hope that they do pass that bill. It might just help out the Big 3 some more. The only bad thing is having to explain to customers that it isnt $7500 off the purchase.
Either way it is still a good deal. Keep them coming congress!

For me it doesn't matter. I originally planned on buying in first quarter 2010. Then I got excited because my wife approved and I could was going to but around Sept. Now thanks to Hurricane Ike it has been pushed back to 2010. The only good thing is now I will have taxable income of zero for the next 2 years since I can claim the damage as a loss and use it as a deduction. My down payment will be my refund since I have and will be using my "Camaro money" to repair my home. On the flip side, my down payment will be 1/3 of the MSRP of what I am getting. And maybe I can get some more "Stimulus" money from BHO.

[Croathlete]

"(a) In General- Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to additional itemized deductions for individuals) is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:"

If I'm reading this correctly, it looks like this will be an addition section for additional itemized deductions. This would lead me to believe that someone who takes the standard deduction couldn't take advantage of this.

[Inspector 17]

Originally Posted by kdbolt70

offhand question, I apologize if this is verbose. Does your tax bracket get determined based on your gross income? or after your deductions?

Also, roughly what would this roughly equate to in dollars, having a $7500 tax deduction?

Originally Posted by dayvedayve

Your tax is based on what is left after deductions That is the "taxable income." Your "tax bracket" is then determined by that figure. Deductions come off gross income. Credits come off what you owe in taxes. Credits get the full dollar amount. Deductions only save you a percentage.

For example.... If your tax bracket is 15% You will save about $1100 on taxes.
If you are at 10% then it will be around $750

Another thing that could happen is that you could be in a lower tax bracket than normal if you were within the range of the deduction before. The lower your taxable income the lower your tax bracket.

dayve summed it up nicely, but you can look here for a nice graphical summary - http://taxes.about.com/od/2008taxes/..._tax_rates.htm or check the IRS 2008 1040 instruction form for complete tax tables - http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

[a6pk2go]

Originally Posted by Rodrunner

^^^Thanks for the links. What, are you on vacation?

He lives here like a lot of us.

EDIT: He is however trying to get a nice 2010 Camaro HOME so once he gets it I think he will have to get a laptop and take it on the road.

[TAG UR IT]

Here's an idea on stimulating the economy....


How bout the gov't just give us ALL a tax break on the full purchase price amount! Now THERE is an idea!

[RallyFever]

Originally Posted by TAG UR IT

Here's an idea on stimulating the economy....


How bout the gov't just give us ALL a tax break on the full purchase price amount! Now THERE is an idea!

I would rather have the $7500 credit as it would put more in my pocket>
My state sales tax is only 3%

[Inspector 17]

Originally Posted by RallyFever

I would rather have the $7500 credit as it would put more in my pocket>
My state sales tax is only 3%

I am not sure you understood TAG's comment. I am assuming that the purchase price of your car is going to be greater than $7500.