Tax Break for New “Cash for Clunkers” Program: Do You Qualify for Auto Consumer Stimulus Tax Credit?

This week, President Obama signed into law the Car Allowance Rebate System (C.A.R.S.) – a  program that pays consumers up to $4,500 in tax credit for trading in their cars or trucks for more fuel efficient vehicles.

As the New York Times reports, you will need to check if your vehicle qualifies for the trade-in credit. You can check out The National Highway Traffic Safety Administration web site to see if you are eligible to participate in the program. Generally, to qualify your car must be:

• at most 25 years old.

• gets 18 miles a gallon or less.

• drivable.

• registered.

• insured for the past year.

The government, which is very focused on bailing out the devastated automotive industry, is allocating $1 billion for the program.

CCH (http://tax.cchgroup.com/) reports:

President Obama on June 24 signed legislation aimed at boosting the sale of vehicles at financially struggling U.S. automobile dealerships. The so-called “cash for clunkers” program provides $1 billion in tax-free vouchers to automobile dealers who participate in the new program. The program vouchers, worth $3,500 or $4,500, will be given to dealers when consumers trade in old vehicles for ones with higher fuel efficiency. The vouchers will not be considered taxable income for the car buyer.

The new law limits the number of vouchers to one per customer, including joint registered owners of a single eligible trade-in vehicle. The car voucher measure is included in the 2009 Supplemental Appropriations Bill for Iraq, Afghanistan, Pakistan and Pandemic Flu (HR 2346).

By Paula Cruickshank, CCH News Staf
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More Tax Help, IRS News and Tax Relief Tips:

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4 Responses to “Tax Break for New “Cash for Clunkers” Program: Do You Qualify for Auto Consumer Stimulus Tax Credit?”

  1. karenc Says:

    Cash for Clunkers has another negative consequence. It will hurt donations of cars to charity because the voucher is much greater than the tax deduction for donating a car. Congress could have stimulated car sales by simply returning to allowing car donors to claim the book value as their tax deduction. Since most donated cars are recycled, there would be an environmental benefit as well.

  2. “Cash For Clunkers” – So You Think You Qualify? « A Conservative Wanderer Says:

    [...] PDRTJS_settings_104774_post_2440 = { “id” : “104774″, “unique_id” : “wp-post-2440″, “title” : “%22Cash+For+Clunkers%22+-+So+You+Think+You+Qualify%3F”, “item_id” : “_post_2440″, “permalink” : “http%3A%2F%2Fconservativewanderer.wordpress.com%2F2009%2F07%2F27%2Fcash-for-clunkers-so-you-think-you-qualify%2F” } The Car Allowance Rebate System (C.A.R.S.) or “Cash for Clunkers” seems like a good deal, but there are always catches to everything. There is no such thing as a “free lunch” [Article - 1. What is the Car Allowance Rebate System? | 2. Tax Break for New “Cash for Clunkers” Program: Do You Qualify for Auto Consumer Stimulus Tax Cre...]. [...]

  3. Congress Approves $2 Billion to Keep “Cash for Clunkers” Program Alive. Get Your Tax Free Auto Stimulus! | Tax Relief Tips from the Experts at Tax Resolution University Says:

    [...] replenishment of the CARS fund will allow Americans to continue enjoying non-taxable cash vouchers when they trade in their old gas guzzlers for new energy-efficient vehicles. (The vouchers are only [...]

  4. Tax Help for Cash For Clunkers Participants – How Dealerships Can Save Money by Benefiting from Additional IRS Tax Breaks | Tax Attorney and Tax Resolution Services: IRS Help Blog Says:

    [...] dealers across the nation have been benefiting from the “Cash for Clunkers” stimulus program–selling more fuel efficiency cars in exchange for fuel-guzzling [...]

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