Cash for Clunkers!

[Guest Xprefix28truck]

I don't have any political statemint, BUT I did find out yesterday, you can get some VERY nice body repair parts!!!! Only thing that's junk is the motors.

[Barry Wolk]

That's been stated many times before. Many of "the sky is falling" group brought up that inaccuracy earlier.

[Guest Xprefix28truck]

How do you feel it is an inaccuracy???? I PURCHASED parts!! Beautiful 1999 Dodge full size showing 72000 miles. Flawless parts.

[Barry Wolk]

Please re-read. I said others previously posted this as in inaccuracy.

[Guest Skyking]

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(BTW, You did notice that all but Ford reported negative sales growth during the first stage of the C.A.R.S. program, didn't you?)

Dave, I saw that and I'm sure your guess why is as good as mine..............

[Dave@Moon]

Thought some of you would want to know:

Cash for Clunkers to end on Monday - Yahoo! News

[Guest windjamer]

I just heard today that the $4500. you get on trade has to be claimed as taxable income. I dont know if thats true but lots of folks wanted change, still want it?:)

[Dave@Moon]

I just heard today that the $4500. you get on trade has to be claimed as taxable income. I dont know if thats true but lots of folks wanted change, still want it?:)

Man, people will say anything to get others to vote for their bosses. I'm getting really sick of cynical "media" on either side of the aisle deliberately manipulating people for others who remain hidden behind the scenes.

Whatever you may have heard, the $4500 is NOT taxable income for the buyer. It IS taxable income for the DEALER, despite a few (probably partisan) rantings to the contrary by some dealers. It WAS stated incorrectly at one NHTSA webinar, and a few dealers decided to run with it. How any of them could have legitimately thought that they'd get paid $4500 or $45 from the government and have it be tax-free is beyond me.

However for the buyer, none of this matters.

(BTW, this was news about a month ago.)

Doh! Dealers learn Cash for Clunkers rebates count as taxable income — Autoblog

Edited August 28, 2009 by West Peterson
added (or allowed...) phrase (see edit history)

[jdome]

Let's relax and take a breath here. The $4500 rebate is not taxable income for the dealer because it is not his income per say. If the dealer paid $13,000 for the car & sold it for $15,000 his profit is $2000 regardless of who paid 4500 & who paid $10500, but that is not necessarily his taxable income either. The dealer's taxable income is the gross sales of all the cars he sells for the year - cost of inventory - wages - all other business operating expenses = taxable income. (could very well = 0) Regardless of how many $4500 rebate checks he collects. That is the way it works today and has always worked.

I can see where there is going to be a lot of confusion over taxes. Some states charge sales tax on the full selling price of a new car before trade and other states charge sales tax on the balance after the trade is deducted. How was the rebate treated in those states, as trade-in or as a sales taxable down payment?

In the real world, the buyer is the recipient of the $4500 rebate regardless of who it is sent to and would normally be treated as any other income for the buyer, whether it is a gov't payment or a lottery winning. Unless the gov't program specified in law that the rebate amount is specifically exempt from income. If it is not exempt from income, and several "traditional" sources are reporting it is not exempt, then the buyer will be responsible to claim and pay income tax on it. The stickler is that if you are in the typical 21% tax bracket then you will owe $900 in more income taxes. In other words you got the same deal as if you traded your clunker for $3600. Worse yet would be if the $4500 added to your regular income bumps you up to the 28% bracket then you not only will pay an extra 7% on the $4500 rebate but an extra 7% on the rest of your income too. Ahhhhh..... such a deal.

[Guest THEHKP7M13]

Let's relax and take a breath here. The $4500 rebate is not taxable income for the dealer because it is not his income per say. If the dealer paid $13,000 for the car & sold it for $15,000 his profit is $2000 regardless of who paid 4500 & who paid $10500, but that is not necessarily his taxable income either. The dealer's taxable income is the gross sales of all the cars he sells for the year - cost of inventory - wages - all other business operating expenses = taxable income. (could very well = 0) Regardless of how many $4500 rebate checks he collects. That is the way it works today and has always worked.

I can see where there is going to be a lot of confusion over taxes. Some states charge sales tax on the full selling price of a new car before trade and other states charge sales tax on the balance after the trade is deducted. How was the rebate treated in those states, as trade-in or as a sales taxable down payment?

In the real world, the buyer is the recipient of the $4500 rebate regardless of who it is sent to and would normally be treated as any other income for the buyer, whether it is a gov't payment or a lottery winning. Unless the gov't program specified in law that the rebate amount is specifically exempt from income. If it is not exempt from income, and several "traditional" sources are reporting it is not exempt, then the buyer will be responsible to claim and pay income tax on it. The stickler is that if you are in the typical 21% tax bracket then you will owe $900 in more income taxes. In other words you got the same deal as if you traded your clunker for $3600. Worse yet would be if the $4500 added to your regular income bumps you up to the 28% bracket then you not only will pay an extra 7% on the $4500 rebate but an extra 7% on the rest of your income too. Ahhhhh..... such a deal.

Buying a new car is such a scam and a quick road to the poor house if you do it often.

[Dave@Moon]

Let's relax and take a breath here. The $4500 rebate is not taxable income for the dealer because it is not his income per say. If the dealer paid $13,000 for the car & sold it for $15,000 his profit is $2000 regardless of who paid 4500 & who paid $10500,....

Apparently some dealers were trying to say that the $4500 did not count against the sale price, and was therefore untaxable. They were wrong.

In the real world, the buyer is the recipient of the $4500 rebate regardless of who it is sent to and would normally be treated as any other income for the buyer, whether it is a gov't payment or a lottery winning. Unless the gov't program specified in law that the rebate amount is specifically exempt from income.

It did.

From: CARS.gov - Car Allowance Rebate System - Helpful Q&As for Consumers - Formerly Referred to as “Cash for Clunkers”

Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer.

That's the whole point. West deleted the language .............................

Edited August 29, 2009 by R W Burgess (see edit history)