Filing taxes can be complicated as you try to receive the best possible refund. As you and your tax accountant look over your forms, you can ask questions about different variables. One of the more common variables is car insurance premiums. Perhaps you are curious regarding whether your premium is tax-deductible. Depending on your car’s usage, you may be able to deduct some expenses related to your auto insurance premiums.
Here is a closer look at how you can use your car insurance to help your tax return.
Using Your Car for Personal Use
If you use your car strictly in your personal life, you may not be able to deduct insurance costs. Generally, you must use your car to complete business-related tasks in order to use your auto insurance premium on your tax return. Examples of professional usage include transporting/delivering business supplies, performing delivery services, or driving to a business event. Be aware that transporting to work and back home every day does not count as a business-related endeavor.
Vehicle Loss
If you suffered a vehicle loss or your car was stolen, you should be eligible to deduct it on your tax return. This scenario is valid regardless of whether you are using your vehicle for professional or personal use. Your car is classified as a total loss if it suffers damages to the point where you can no longer use it. There are several steps you are required to take to qualify for the deduction.
It’s recommended that you file a claim with your car insurance company. The accident that caused damage to your car shouldn’t be caused by your negligence. The total costs cannot exceed 10% of your Adjusted Gross Income. Remember that your insurance carrier cannot reimburse you for the loss. If the total damages to your vehicle exceed your policy limits, you can deduct the difference. It’s recommended that you ask your accountant if you can deduct the costs of your insurance deductible when filing your tax return.
Professional Usage
As previously noted, in almost every scenario, you can deduct part of your insurance premium if you use your car for business-related purposes. Perhaps your car is an important part of your job. Perhaps you are self-employed. Maybe you are an employee, but your boss is not required to reimburse you for expenses related to the professional use of your car. Besides insurance premiums, you can also deduct other auto-related expenses such as repairs, gas, parking, and depreciation if these expenses are directly tied to your professional vehicle usage. Your total costs should exceed 3% of your Adjusted Gross Income.
Things to Consider
It’s recommended that you inquire about filing an auto-related tax return with your accountant. They can advise you on any deductions that you qualify for and how to fill out your tax forms.
More: Is Your Car Insurance Payment Eligible for a Tax Deduction?
Consult with Gee-Schussler Insurance Agency
If you use your car to complete work-related tasks, you should be able to claim your car insurance deductible on your taxes. If you have any questions, contact us today. Our team here at Gee-Schussler Insurance will assist you in resolving all your issues related to car insurance and create a customized policy for your specific needs.
