One frequently asked auto insurance question is, “Can I write off my car insurance premiums on my annual tax return?” The answer is that it depends on how you use your vehicle. You may be able to write your car insurance off if you use your vehicle for these business purposes:
- Driving to conferences
- Picking up or delivering supplies
- Visiting clients
Consequently, you cannot deduct from your taxes the commute to and from work.
Using your car for business purposes isn’t enough to claim your car insurance on your taxes. You must have auto-related costs that are more than 2 percent of your adjusted gross income (AGI). If you qualify for a car insurance tax deduction, you can deduct these items:
- Car repairs
- Depreciating asset
- Gas refills and oil changes
- Garage rental costs
- Lease payments
- Registration and license fees
- New tires
- Parking fees
Car insurance tax deductibles can also apply to these individuals:
- Armed forces reservists traveling up to 100 miles away from home
- State and/or local government officials
- Qualified performing artists
Entrepreneurs who use their cars for their business may be able to qualify for a car insurance tax deduction.
Business and Personal Use
You can qualify for a tax deduction if you use your car for both professional and personal use, but you’ll need to divide the costs based on the number of miles you drove for professional use and the miles you drove for personal use.
Expenses Related to Car Insurance Claims
There is one exception to the business/personal use law: Those who only use their cars for personal use may be able to write off their car insurance costs if they have expenses related to car insurance claims, such as a vehicle loss or auto theft.