Checkmark iconCan I Write This Off?

Can I write off car insurance?

TL;DR

Yes, car insurance can be written off, but only under certain conditions related to business use.

Detailed Answer

Car insurance is deductible if the vehicle is used for business purposes. This can include a vehicle that is used for both personal and business use, but the deduction is limited to the percentage of time the vehicle is used for business. For example, if you use your car 50% of the time for business, you can deduct 50% of your car insurance costs. However, if the vehicle is used solely for personal use, the insurance is not deductible. It's important to keep detailed records of your business use, including mileage logs and receipts, to substantiate your deduction if the IRS ever questions it.

Where to Put It on the Tax Form

Schedule C (Form 1040), Line 9

Real World Example

A freelance photographer uses her car to travel to photo shoots, transport equipment, and meet clients. She uses her car 70% for business and 30% for personal use. She pays $1,200 a year for car insurance. She can deduct $840 (70% of $1,200) as a business expense.

Calculation Required

A calculation is required for this deduction.

To calculate the deductible portion of car insurance, determine the percentage of car use for business purposes and apply this percentage to the total insurance cost.

Audit Risk & Documentation Tips

To reduce audit risk, keep detailed records of business use of your car, including dates, mileage, and purpose of trips. Also keep receipts for insurance payments. Use a mileage tracking app or a logbook to track business use.

IRS Reference

IRS Publication 463: Travel, Gift, and Car Expenses

Relevant Industries

FreelancersSmall BusinessRideshare DriversReal Estate Agents

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 3, 2025

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