Wednesday, August 26, 2009

One little detail that the Feds neglected to advertise in Cash for Clunkers--the rebates are taxable income

So the US government took your tax dollars to use for Cash for Clunkers, but you thought, "Hey, I'm getting a great deal here."

Until you find out--usually well after you've made the deal--that the Feds, and possibly your State, are going to count that Clunker rebate check as taxable income:

The Cash For Clunkers program is adding to the activity at treasurers' offices all around South Dakota. First, people were asking for proof of ownership, so they could show they owned their vehicle for a full year, allowing them to cash it in. Now, they'll be returning to register their new vehicle. And when they do, new owners need to bring every bit of paperwork provided to them by their dealer.

"That means they need their title, their damage disclosure, their bill of sale and the dealers have 30 days to get that to them," Minnehaha County Treasurer Pam Nelson said.

But many of those cashing in on the clunkers program are surprised when they get to the treasurer's office windows. That's because the government's rebate of up to $4500 dollars for every clunker is taxable.

"They didn't realize that would be taxable. A lot of people don't realize that. So they're not happy and kind of surprised when they find that out," Nelson said.

Funny how that little tax maneuver was never exactly high-lighted in any of the government marketing of this idea?

Get used to this: as Kilroy found out with unemployment, and as a number of legislators want to do with employer contributions toward health insurance premiums, this administration will be coming after you with every stealth tax it can muster.


G Rex said...

The other detail is that the primary beneficiaries are Japanese carmakers...I saw on BBC the other morning that Japan is officially coming out of recession.

Tyler Nixon said...

Gosh, Steve, didn't you get the memo? If you had written this post in bold-faced oversize type it would have made it more true....