Chillious
Best choice for Financial and Cryptocurrency News

- Advertisement -

- Advertisement -

BTC
$10,959.44
-1.34%
ETH
$379.48
-1.51%
LTC
$48.05
-1.35%
DASH
$71.82
-1.79%
XMR
$94.43
-0.22%
NXT
$0.01
0%
ETC
$6.20
+1.32%
DOGE
$0.00
0%
ZEC
$57.70
-1.15%
BTS
$0.03
-2.03%
DGB
$0.03
+7.88%
XRP
$0.25
-1.27%
BTCD
$27.53
0%
PPC
$0.22
+0.74%
CRAIG
$0.00
0%
XBS
$1.10
0%
XPY
$0.05
0%
PRC
$0.01
0%
YBC
$30.69
0%
DANK
$0.00
0%

Boat Owners May Save on Tax Deductions

With tax time rapidly approaching, recreational boaters should know they may be able to claim federal tax deductions when they file their 2010 federal income-tax returns.

BOATUS, a national recreational-boating organization, advises that boat owners who last year paid large state sales taxes on a boat purchase or who obtained a loan to finance a large boat may be eligible for deductions.

For boaters who had to pay large state sales tax on a new or used boat in 2010, the Tax Extenders Act of 2008 offers a federal tax deduction for state sales taxes, according to a BOATUS news release.

However, boat owners who fall into either category (who borrowed money to purchase a large new or used boat) must choose either the state sales-tax deduction or the state income-tax deduction on their federal return -they aren't eligible to apply both deductions.

To use the state sales-tax deduction, the sales tax on a boat buy must be applied at the same tax rate as the state's general sales tax (in North Carolina's instance, 7.5 percent).

Also, in order to claim a sales-tax deduction, citizens must itemize their tax returns. Those deductions are entered on IRS form Schedule A, line 5b.

Boat owners who had a boat loan also may claim as a deduction from their federal taxes the mortgage interest paid on the loan. Federal law allows deductions of home mortgage interest for a second home, in addition to their primary home (taxpayers must itemize deductions). A boat is considered a second home for federal tax purposes – but only if it has a galley, an installed head and a sleeping berth.

Many boat owners probably aren't aware of this potential tax write-off because not all lending institutions send borrowers an Internal Revenue Service Form 1098 to report interest paid. However, even though a borrower doesn't receive this form doesn't mean he or she can't take advantage of the deduction.

If a boater with a loan hasn't received a Form 1098 from a bank or other lending institution, he should contact his lender for the amount of interest paid on the loan. This amount should be entered on line 11 of Schedule A, along with the lender's tax ID number. If a boater has received a Form 1098, the boater should enter the amount on line 10 of Schedule A.

Unfortunately, if a boat owner is using the Alternative Minimum Tax, most deductions are unavailable. Boaters are urged to contact a tax preparer or financial advisor for more information.

Boaters can go to http://www.IRS.gov and download Publication 936 or the Fact Sheets to get more details about mortgage deductions on qualifying boats.

To obtain more information about state tax deductions, boaters can download Publication 600, which includes each state's tax tables.

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More