Can You Write Off Auto Insurance as a Job Expense?

Tolls, parking, fuel and insurance are deductible for business use of your car.

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If you have business use of your automobile that goes beyond just driving to and from work, you might be able to write off some of those expenses, including a portion of your auto insurance premiums, when you file your federal income tax return. How much you can write off depends on whether you used your car as an employee or for self-employed business purposes.

Actual Expenses

The Internal Revenue Service gives you the choice between claiming your actual expenses for business use of your car or claiming the standard mileage deduction. The 2012 standard mileage rate for business was 55.5 cents per mile, increasing to 56.5 cents per mile for the 2013 tax year. If you choose actual expenses, you can deduct your expenses for fuel, oil, maintenance, repairs, tires, registration fees, licenses, auto insurance and depreciation.

Percentage of Use

You can deduct 100 percent of the cost of operating your vehicle, including your insurance premiums, provided you use your car 100 percent of the time for business. If you use your car for both business and personal use, only the percent that applies to your business use is deductible. One way to determine the percentage of business use is to keep a mileage log, detailing the number of miles you drove for business and the number you drove for personal use. Divide the number of business miles by the total miles to determine the percentage of business use. Multiply your insurance premiums for the year by the percentage of business use to determine how much of your insurance you can deduct.

Employee Business Expenses

If you operated your car as an employee, you must itemize your deductions to claim a write-off for business use of your car. You can include this expense with your other employee business expenses on Line 21 of Schedule A. Employee business expenses are subject to the 2 percent rule. Only the total amount of these expenses that exceed 2 percent of your adjusted gross income are tax-deductible.

Self-Employed Expenses

If you operated your car as part of your own business, you would report your car expenses, including your insurance premiums, on Schedule C. Auto expenses on Schedule C are not subject to the IRS's 2 percent rule. You can claim your business use of car expenses regardless of whether you claim the standard deduction or itemize your deductions.

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About the Author

Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.

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