New Jersey Taxes On Cars Leased Out Of State
- March 25, 2020
- lease deal
- Posted by Dan Rose
- Comments Off on New Jersey Taxes On Cars Leased Out Of State
One of the most appealing forms of financing a new vehicle for cost-effective is via car leasing. A very convenient, cost-effective, and many people method that permits you to drive better cars with novel features. As a matter of fact, more and more businesses and individuals in New Jersey are opting to lease vehicles every year. With the increment in the number of drivers who lease rather than buying their cars comes with serious implications that most residents of New Jersey ought to be aware of before sealing any auto lease deal in NJ.
Aside from having to deal with some fraudulent and deceptive auto leasing companies, one bone of contention with car leasing is that you have to pay a car lease tax, even without obtaining a car lease in New Jersey. This new form of tax is dubbed as the “use tax.”
Do we have to pay taxes on cars leased outside of NJ with NJ as our hometown?
In New Jersey, there’s a sales tax, which imposed when you buy certain goods or services. This tax is practiced in about forty-four other states in the US, except for Alaska, Delaware. Montana, New Hampshire and Oregon. Any goods or services you purchase in NJ, including obtaining a car lease is subject to the sales tax. New Jersey also has a “use tax.” This tax except for on services or goods, obtained out of state. Goods tax that falls under the use tax is not subject to any sales tax.
As this tax applies on the use of goods or services in New Jersey, if you obtain an out of state lease, you may have to report and pay New Jersey’s use tax on your NJ-1040 income tax return. The out of state purchases are to be entered on the worksheet K., however, buying a slight exception. If you’re charged taxes when you make your auto lease payments by another state outside NJ, because you pay sales tax to that outside state, you’ll not be required to pay New Jersey to use tax.
How is a vehicle lease defined under the NJ sales and use tax?
According to New Jersey consumer automotive tax guide, motor vehicles are explicitly all automotive machines designed solely for operation on public highways. A motor mostly powers these machines and they include cars, motorcycles, and house trailers. However, some products such as snowmobiles, all-terrain vehicles, lawn tractors, and bulldozers are not to be considered as a motor vehicle.
If an out-of-state resident purchases a motor vehicle in New Jersey and pays New Jersey Sales Tax, is he required to pay Use Tax on that purchase in his or her home state?
There’s no simple, straightforward answer to this. However, it largely depends on the purchaser’s home state. The taxing authority of the out-of-state purchaser’s home state is in the best position to determine if the purchaser will be eligible for a credit of Sales Tax paid in New Jersey. Contact a reliable NJ auto lease dealer to answer your questions as it relates to all tax regulations in NJ.