Car Insurance & Taxes
Tax time can be stressful but being prepared come tax time can help you get your maximum refund. In certain situations, your car insurance costs may be tax-deductible. Here’s a break down of some of the questions we get about Car Insurance come tax season.
Are Car Insurance Premiums Tax Deductible?
If you use your vehicle only for personal use, it is unlikely that you are eligible to claim auto insurance premium expenses on your tax return. If you use your car for business-related purposes like driving to visit clients, driving to conferences, or transporting business items, you may qualify for credits. It’s important to note that your standard commute is not considered a business-related purpose.
If your vehicle is an integral part of your business, you may be able to deduct your premiums. You may qualify for these deductions if you are self-employed and use your car for business purposes, or you are an employee and your employer does not reimburse you for the expenses related to the use of your car.
Are Car Insurance Deductibles Tax Deductible?
Whether you use your vehicle for personal or professional business, you may be able to claim loss deductions in the case that your vehicle was deemed a “total loss”. To qualify for a deduction for a car that is stolen or declared a total loss you must file an auto insurance claim. The accident must not be the result of your negligence, your insurance provider cannot cover the entirety of your loss, and your costs must be greater than $100 and more than 10% of your adjusted gross income.
If the damage to your car exceeds your policy limits, you can deduct the difference of what is covered and what you paid out of pocket. This may also cover your deductible cost.
Before filing your taxes with these deductions, you should discuss your filing with your accountant or tax professional to ensure that you qualify and ensure that you file properly.
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