Question

I have question about deducting car loan interest from my tax return. Can I deduct car loan interest if I use my car for business?

Answer

Typically, deducting car loan interest is not allowed. But there is one exception to this rule. If you use your car for business purposes you may be allowed to partially deduct car loan interest as a business expense.

If you use your car for business purposes, you may be able to deduct actual vehicle expenses. But you will need to keep accurate records of your business expenses to show proper use of the vehicle. Actual vehicle expenses that may be deducted, when used for business, may include but is not limited to:

Automobile loan interest
Vehicle maintenance
Insurance
Tolls and parking fees
Gasoline
Oil Change

To determine the amount of each actual vehicle expense that may qualify for a tax deduction you will need to calculate the percent of time that the vehicle is used for business. Typically, this calculation is determined by the number of miles driven for business purposes only.

You will have to determine if it is more beneficial to you to use the standard mileage rate deduction or actual vehicle expense deduction. You cannot use both methods.

Related Topics

Related Resources

Deducting Business Vehicle Expenses

Can you deduct business vehicle expenses on your taxes? Learn more about business vehicle deductions and get tax answers at H&R Block.

If you are required to use your personal vehicle for work, can you claim gas on taxes or do you just use the standard mi

Can you claim gas and drive time on your taxes? Learn more from the tax experts at H&R Block.

I use my personal computer and computer equipment for business. Is there a depreciation schedule for computers and comp

What is the depreciation schedule for computers and other equipment? Learn more from the tax experts at H&R Block.

Does the IRS allow you to deduct medical expenses paid with loan money? Also, am I allowed to deduct medical expenses pa

Learn whether you can deduct medical expenses paid with a loan or credit card from your federal return with advice from the tax experts at H&R Block.