Overhaulin'

How to buy an expensive car with cash? read the details below before answering!?

Read the detail before answering. This is a fictitious question. Now let us say for example that i have $150k in my savings account and i want to buy an expensive car around $140k with cash. Now in this case my records from last five years tax returns indicate that my age AGI (adjusted gross income) was only $15k each and every year for the five years. So that is a total $75k for five years combined. Also the income i earned was from working and in the tax return i do not have any taxable interest. Moreover i do not know anyone neither i am going to get any inheritance or any gift from someone. IRS really does not even knew about my $150k. I do not have any savings account according to IRS. Now if i go out and purchase an expensive car worth around $140k then is it possible for IRS to catch me as a fraud because my tax return for the five year combined shows only $75k and does not even include any taxable interest. If i can buy the car then is it possible for me to claim the interest on the car as itemized deductions. Does IRS really cares where people get the money to buy big ticket items like expensive cars,house,etc. For how many years does IRS have my income records in their system. Does it get erased or my income records stays forever. Please try your best to answer it accurately and to the best of your knowledge. No irrelevant answers please.

Public Comments

1. If you plop a significant amount of cash down to buy a car, the dealership MUST report the fact to the treasury. At some point the IRS is going to to see the cash transaction and the lack of income and audit you.
2. if your AGI was only $15,000 a yr, how on earth do you have $150,000 in your saving acct? the IRS will find you sooner than later
3. It is called MONEY LAUNDERING and you WILL get caught...
4. I will answer only the items that I am positive about. You cannot claim interest on a car payment on your tax returns. That stopped being a deduction years ago! They keep your income records forever but can only go back 7 years to audit. (income records are kept due to needing social security amounts paid in). If you have $150k in a savings account the interest paid to you on that money HAS been reported to the IRS each year, even if you didn't list it as income on tax returns, the bank has to send the info in. Eventually they (IRS) will probably realize there is a problem. I don't think the car company reports the sale to the IRS though.
5. There is really nothing wrong with the situation that you have described. There are some notes of interest though. First if you are paying cash for the car there would be no interest because there would be no loan. Sales tax on the vehicle can be used to reduce your taxes, however with only 15k per year you couldn't take advantage of it. The cash payment would be reported to the treasury by the dealership. This would probably flag your file and cause an audit if your current year return doesn't support the purchase. Does the IRS care if you pay cash for large ticket items? Not really, but they do care about making sure that all the income you have is being reported and taxed. Observing large cash transactions is simply a method they employ to see if you are trying to hide income. I really can't say about the IRS but the Social Security Administration does have records on all of your income so they can calculate any benefits due you when you retire.