Thursday, August 27, 2009

Clunker Cash to be Taxed as Income? I did not know that Captain Obvious!

I really should have known this, but I did not. And I signed up every customer in our dealership to the "Cash for Clunkers" paperwork.
I had no idea the money would be shown as INCOME on your 2009 income tax return. $4500.00 given to you without withholding withheld? That'll stink come 2010. At least that's the way Shawn Hannity explained it this evening on Fox.

I cannot find exact corroboration for this claim yet, but it wouldn't surprise me. Some of the stories I found said that state sales tax applied. Few said that it was subject to income tax. One source said that was absolutely wrong.
Associated Content - "Cash for Clunkers taxable income rumors are false! Cash for Clunkers taxable income rumors are spreading around the internet like wildfire as several internet blogs have started claiming that there will be unseen taxes on the program.

These internet blogs are stating that the Cash for Clunkers income is taxable, and that people will have to pay taxes on the $3,500 or $4,500 that they received in the form of an income tax. These blogs are hoping that they can scare people into coming to their sites to give them hits, but in reality, those blogs are just spreading mis-information about a program that thousands of Americans have already taken advantage."
I didn't buy under the clunker deal, so it won't affect me. None of the paperwork I had customers sign had that disclosure. In Vermont there was no sales tax charged on the Clunker Cash.

You might want to contact your tax preparation service, but I'd wait a week so that you can skip the rush.


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3 comments:

Professor Hale said...

I love it when people pretend to not see the obvious unintended consequences. Just wait for all the whining and gnashing of teeth next feb-april when the tax bill comes due.

Carol said...

I suspected as much, though I did not think the gov't would be so underhanded.
I should have known better, shouldn't I?

Carol said...

According to a couple web sites, another cash for clunkers is coming soon. This one for home appliances. However the buyer will be responsible for the disposal of the old appliance. Somehow I am picturing old fridges and stoves dumped along road sides.
The auto cash for clunkers was such a waste of resources and use of our tax money. This one will be as bad. If you can afford a new appliance, there are discounts from various dealers. Why use tax money?