Question

Is car insurance tax deductible? If so, can you deduct car insurance premiums paid on a monthly basis?

Answer

To determine if car insurance is tax deductible for your vehicle, you will have to establish the use of your car. Do you use your car for business? If so, you can deduct car insurance premiums paid. The vehicle expenses you deduct must relate to:

  • Your main job
  • A second job
  • Both jobs

Generally, you can deduct unreimbursed vehicle expenses using one of these methods:

  • Standard mileage rate — $0.535 per mile in 2017. If you use the standard mileage rate, you cannot deduct auto insurance premiums as a separate item.
  • Actual vehicle expenses

Divide the expenses between personal and business use based on the miles you drive. Report these expenses on Form 2106.

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