Can I Write Off My Car Insurance?
Car expenses, including car insurance, may be deductible on your income tax return if you used your car for your business, for work done for your employer, for volunteer charity work or for travel to receive medical care.
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Travel To Receive Medical Care
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The Internal Revenue Service considers an allowance for the use of your vehicle to drive to a place where you will receive medical care. You can either take a deduction for the number of miles driven or by taking gas and oil expenses. Car insurance, repairs and other vehicle expenses, however, are not deductible. When choosing to take the mileage deduction, the IRS gives a standard rate per mile, such as 16 cents, which can change every year. Medical vehicle deductions are reported on Form 1040 Schedule A, "Itemized Deductions." You can also include parking fees and tolls.
Travel To Perform Charitable Work
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An allowance for the use of your car to drive to and from a place where you will do volunteer charitable work can be deducted on Form 1040 Schedule A. You can take a deduction for the actual number of miles traveled, for which the IRS gives a standard mileage rate, or you can take a deduction for the cost of gas and oil, but not for car insurance, repairs or other vehicle expenses. Add parking fees and tolls to your total deduction. If the charitable organization reimburses you for travel expenses, then you cannot take a deduction.
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Using Your Car for Your Job
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You cannot take a deduction for driving to and from your home to work every day. However, if your job has you temporarily (less than one year) working at a site far enough away from home that you must stay at a hotel or motel, the commute between the job site and your place of lodging is deductible. You can either take a straight mileage deduction or a percentage of all of your car's expenses, including gas, oil, car insurance, maintenance, tires, repairs and similar operating expenses. IRS Publication 463, "Travel, Entertainment, Gift, and Car Expenses," will give you more details on allowable deductions for work.
Using Your Car for Your Own Business
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As a business owner, you can take a deduction for the business use of your car. You can either take the IRS's standard mileage deduction for business miles driven, or you can take a percentage of gasoline, oil, car insurance, repairs, license plate fees and all other car expenses. Keep a record of the total miles driven and the total miles driven for business. The percentage of business use can then be applied to all car expenses to arrive at an amount that can be deducted. If you have a fleet of five or more vehicles that are used in your business simultaneously, the IRS requires you to take the actual expenses rather than use the standard mileage deduction. If your business is classified as a sole proprietorship, report your vehicle deductions on Form 1040 Schedule C, "Profit Or Loss From a Business."
Mileage Books
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Regardless of the method you use for taking an auto deduction on your taxes, you must keep accurate records. The IRS considers the mileage booklets sold in office supply stores to be sufficient proof. These booklets record the date, odometer readings, destination and purpose for each trip. Keep additional documentation when possible to support your mileage book, such as toll and parking receipts, car insurance premium invoices and repair bills.
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