Are Auto Insurance Premiums Tax Deductible?
Auto insurance premiums are required for any automobile owner in most states. However, you cannot deduct automobile insurance on vehicles driven for personal use. Business use of a vehicle creates an exception.
Other People Are Reading
-
Deductions Allowed
-
You can deduct the insurance premiums paid for vehicles that were bought and used for the business. According to the IRS, the deducted premiums can cover only "liability, damages and losses."
Standard Mileage Rate
-
The IRS has a standard mileage deduction that covers the cost of using a vehicle for business use. Insurance premiums are already included in this rate. By taking the standard mileage rates, you cannot itemize an expense for automobile insurance.
-
Mixed Use Vehicles
-
Vehicles used for both business and recreation can still qualify for an insurance premium deduction. You must figure out what portion of the insurance premium covers the business use of the vehicle in order to take such a deduction. One way to do this is to keep a driving log to track business use.
Multiple Vehicles
-
You can take a tax deduction on the insurance premiums for all of the vehicles your business operates.
Expiration
-
You can only deduct the insurance premiums paid in the tax year on that year's tax return. You cannot deduct insurance premiums for the previous year on the current year's return. Deductions for prepaid (payments for next year) premiums also are not allowed.
-
