This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Car Insurance And Taxes

It's that joyous time of the year when we figure out our tax obligations. As you travel down the bumpy road of deductions, you may be able to write off a few car expenses, including some tied to insurance.

Auto insurance premiums and business use of your car: Are you self-employed and use your vehicle on the job? Or are you employed but use the car for work-related reasons at least part of the time, without being reimbursed for expenses by your boss? If so, then you may be able to deduct some of your insurance premiums, says Leonard C. Wright, a San Diego-based financial planner and spokesperson for the American Institute of Certified Public Accountants.

First, you have to determine how much your vehicle is used for work, says Wright. For example, if your car is used 75 percent of the time for business and the rest of the time for personal driving, then you can typically base your deductions on that split of percentages. In this case, you would deduct 75 percent of your auto expenses, including insurance premiums, gas, oil, repairs, registration fees, lease payments, depreciation, parking and toll fees.

You'd list the expenses as miscellaneous itemized deductions. But keep in mind that you can only qualify for these deductions if they total more than 2 percent of your adjusted gross income. In other words, if 2 percent of your gross income is, say, $1,000, your expenses would have to be above that to claim all the write-offs.

The alternative is taking the standard business mileage deduction. The Internal Revenue Service has set it at 55.5 cents a mile for 2012, with all expenses (including insurance premiums) figured in that rate. There are restrictions, however, and Wright advises studying the IRS guidelines or talking to a tax consultant before going this route.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 -1.15%
FB $117.58 0.73%
GOOG $693.01 0.29%
TSLA $240.76 -2.81%
YHOO $36.60 0.03%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs