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Ask the Dolans: How do tax credits for new car buyers work?

Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Click here to ask Ken and Daria your question.

Chrysler is bankrupt and GM is close behind. Once a symbol of American ingenuity and determination, the auto industry is in tatters thanks to plunging sales. As part of its efforts to save American automakers, the Obama administration has introduced some new tax credits to entice new car buyers into the market. Get the low down on how they work from Ken and Daria Dolan of Dolans.com.

Dear Ken and Daria,

I've heard about new tax incentives being offered if you buy a new car. How do they work and who qualifies?

--Marie




There are a slew of new tax breaks that you need to know about! Learn about all the new tax rules that can save you money at Dolans.com.

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How to Write Off Sales Taxes

For the years 2005 through 2013, the Internal Revenue Service (IRS) permits you to write off either your state and local income tax or sales taxes when itemizing your deductions. People who live in a state that does not impose income taxes often benefit most from this deduction. However, you might also be better off deducting sales taxes instead of income taxes if you make large purchases during the year and your total sales tax payments exceed those for state income tax. You can use either the actual sales taxes you paid or the IRS optional sales tax tables.

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