Requisites for tax deduction
The tax deduction covers the cost of the vehicle’s engine, the equipment used to store or deliver the fuel and the equipment used to exhaust combusted gases provided the expense on this head is not more than $2,000.
This deduction applies for vehicles bought in the year 2005. Those who had purchased an automobile in 2004 or any other taxable year have to fill an amended tax return Form 1040X for that year.
Further Requisites:
The vehicle must be new and purchased for personal usage. It cannot be bought for resale.
The vehicle must be used primarily in the US.
The vehicle s pollution/emission capacity must meet all federal and state requirements
The vehicle must have four or more wheels, and should be driven on road. (does not include vehicles operating on rails)
If any of the above requirements get altered within 3 years of purchase, the taxpayer may have to pay back some of the amount that was claimed as tax deduction.
This deduction is valid up till December 31, 2005. Vehicles bought in 2006 and later, may be entitled to a federal income tax credit. However, this is dependent on the fuel economy, fuel savings and other factors.
