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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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I paid off my car lien in 2015. Can I claim the amount paid

Customer Question

I paid off my car lien in 2015. Can I claim the amount paid when doing my taxes
Submitted: 8 months ago.
Category: Tax
Expert:  Lev replied 8 months ago.

For which tax year taxes were paid and what types of taxes were paid?

Customer: replied 8 months ago.
I am getting ready to file by 2015 taxes. I paid $5,600 to satisfy my car loan. Was paid in 2015. Can I use that amount in any way as major purchase amount to claim>
Expert:  Lev replied 8 months ago.

Appreciate your clarification,

If that is a personal car - that payment is not deductible.
In the year the car was purchased you paid purchase price AND sales tax (either to dealer or when the car was registered ) - in this year you may deduct sales tax.

That is regardless if you used a loan or used your own funds.

But when you pay back the loan - that is not treated a "purchase" - you simply paid back the amount you borrowed.

When you took the loan - it was not included into your income - correct?
So - when eventually the loan is paid back - that payment is not deductible...

The interest part of that payment however may be deductible if the car is used for business purposes. But if that is strictly your personal car - interest is classified as personal expense.

I am glad you asked that question as you are evaluating all your expenses from tax prospective.

If you have other expenses that you are not sure whether they may be used on your tax return - please let me know.

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