It’s hard to believe it’s almost tax season again! With April just a few months away, lots of people are already getting a jump start on their 2020 tax returns. Taxes can be confusing, but here are a few helpful tips to understand how taxes work with cars.
Newer Cars = Higher Taxes
Most people already know this, but the newer a vehicle, the higher the taxes you will have to pay on it. Vehicle tax is determined by state and county, with some states having higher rates than others. Colorado collects a 2.9% state sales tax on vehicles. The more expensive a new vehicle is, the higher the amount of tax you’ll have to pay.
Vehicles Can Be Deductible
The good news about car taxes: sometimes you can claim it as a deductible. If you purchase your vehicle for business, medical, moving, or charitable causes, it may be eligible. The operating of the vehicle may also be claimed, providing you keep track of your hours and usage. A good rule of thumb is to keep all receipts and paperwork just in case you can claim a deduction. Unfortunately, commuting to and from work every day does not count as a business expense.
Electric Vehicles Qualify for Tax Credit
If you have an EV, hybrid, or plug-in automobile, you may qualify for tax credit. The amounts are based on the vehicle, and several other factors apply, but generally electric vehicles are eligible. Here is a handy guide for navigating EV tax credits.
Tax time can be stressful as it forces us to look at every aspect of our lives, including our homes, jobs, and investments. However, it can be worth it when there are so many ways to earn money back. When it comes to taxes, don’t forget to take your vehicle into account! From all of us here at Quick-Set Auto Glass, drive safely out there!