Finance Q&A

TurboTax Personal Property Tax Question ?

Q. I am using TurboTax for the first time and everything seems to be going smoothly, except I am lost on one thing. TurboTax asks me if I had paid any "Personal Property Taxes" during 2003. To me, that includes the $280 in propery taxes I paid on my car. But, TurboTax descibes Personal Property Tax as taxes on "boats, motor homes, etc." Since most people own an automobile and pay property taxes on it, I find it odd TurboTax would mention boats and motor homes as an example of this tax is cars were included. At the moment, I have keyed the $280 for my auto taxes into that field, but I am uneasy since TurboTax does not mention cars. Am I right or wrong to put these taxes in that area?

A. On the IRS web site, Tax Tip 2003-56 specifically includes cars. It says: "Personal property taxes are deductible when they are based on the value of personal property, such as a boat or car. To be deductible, the tax must be charged to you on a yearly basis, even if it is collected more than once a year or less than once a year." It doesn't seem to matter what the property is, as long as the tax is based on the value of the property and is charged on a yearly basis. Since most people own an automobile and pay property taxes on it, That depends on the state. I know that New York and New Jersey do not have personal property taxes on cars. (Registration fees are not based on the value of the car, so they do not meet the IRS definition of personal property tax.) I don't know whether most states have this type of tax or not. Maybe because a lot of states have personal property tax on boats and motor homes, but not on cars. (That's just a guess. I don't know if it's true.)

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