Sales Tax

If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can't claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount if it is larger than your State & Local income taxes that year.

In most States with an income tax this is rather uncommon, unless you have made some fairly substantial sales taxable purchases and have both a low taxable income and enough expenses to itemize.

Here is another tip. This one is from a peer-reviewed article.

Pass Through of Tax--tax inventory fee

While VIT is actually one component of the dealer's ad valorem tax, state law allows dealers to pass on to retail buyers the unit tax attributable to that sale. The charge on a retail contract for the tax should be disclosed as "dealer inventory tax" and not misrepresented as a charge required by law or as the "buyer's inventory tax." While the VIT charge can be passed on to buyers, the law does not require that a dealer do so. In fact, the law is neutral on the issue, and an attempt to convince a buyer that the tax is a mandatory charge required by law to be added to the contract is incorrect and actionable.

Addition of the tax on the contract is a negotiable item and a dealer can refuse to sell to a buyer who refuses to have it included. Conversely, a buyer can refuse to sign a contract that has it in. you will pay interest on this fee if you are financing.

Documentary Fee---the dealership cannot charge you this fee. It is not a mandatory fee to pay to the dealership. Not only that, if you finance a vehicle, you will be paying some interest on that small fee as well.

If my Father could no longer drive and I gave him $500.00 for his car worth $15000.00 do I have to pay tax on the car based on $15000.00 or $500.00. We use the car to transport him back and forth to the doctors.

You pay taxes on the sale amount listed on the back of title at time of transfer.

I have been in a very similar situation and am a resident of NJ.

My father could no longer drive.

I wrote "GIFT" on the back of title and this legally exempts me from paying sales tax.

I still had to pay the standard fees for transferring title, registering the vehicle, and obtaining new tags.

Cost of registration depends on what vehicle make/model you are talking about.

The grand total of all my fees paid to DMV amounted to approx $70.

I had to go in person to the DMV of course, this type of procedure can't be done over the internet.

To sum it up and save you a little bit of time:

1) Grab the title and write down all the information on back of title, if you have questions leave it blank and ask while at the DMV.

Remember - your father is technically the seller of vehicle and he must sign and date the back of title where "seller" info is requested and you should sign the "buyer" portion.

He does not have to go with you to the DMV to complete the transfer of vehicle ownership.

2) Go to your DMV.

3) Take off the license plates before you walk in the door.

4) Write down the exact mileage of your vehicle before you walk in the DMV door.

5) Write down your insurance policy number before walking in the door (you will need it).

6) Write down the VIN# of the car (you will need it - should be on title).

7) Walk in the door of DMV

8) Go to information desk line (standard procedure - they will direct you)

9) Fill out all paperwork provided to you (likely to be two forms if I remember)

10) If no questions, go into the line assigned by information desk with your completed paperwork in hand and cash or personal check ready.

11) If any questions, talk to one of the DMV representatives walking around the information desk - they are assigned to help you!

12) After submission of paperwork there will be a waiting period to receive your new documents (Title, Tags, and Registration) depends on how busy the DMV is at the time. I waited about 20 minutes after submitting all paperwork.

A note about sales tax:

The sale of a car is taxed at 7% in NJ, very few residents are taxed at half that rate which is 3.5% because they live in areas which qualify for the reduced state tax rate (example: Vineland and Millville in Cumberland County).

If you buy the car from your father for $500 and write that exact sale amount on the back of the title, you will be charged $35 at the DMV.

$500 x 7% = $35 sales tax.

$500 x 3.5% = $17.50 sales tax if you live in a qualified area of NJ.

If a Power of Attorney handles your fathers affairs:

And/or your father is not capable of completing the seller portion of existing title due to health reasons - a "power of attorney" can complete this section for you.

If you are the Power of Attorney over his affairs

You can complete the seller portion section and you can also complete the buyer portion. If you are Power of Attorney you should absolutely bring a copy of the documentation and the original with you to the DMV. They will want to see it.

In my case, I'm Power of Attorney regarding my fathers affairs.

The DMV clerk handling all completed documents had to refer my situation to a supervisor. This is not an everyday situation at the DMV so be prepared for a little longer wait at DMV if Power of Attorney is involved.

When Power of Attorney is involved:

If possible, you may want to find out when the DMV supervisor will be in the office prior to making a trip. If you need the supervisor and happen to show up on his/her off day or a vacation day - you will have to make a second trip to DMV to complete your quest. It happened to me!