Are Car Insurance Deductibles Tax-Deductible?

By Anton Behr

  • Overview

    When tax time rolls around, many people want to know what is and isn't deductible. While the list is long, there are certain tax deductions that may or may not apply to your situation. Some tax payers might be able to deduct their car insurance premiums and deductibles, though many will not.
  • Who Can Deduct?

    Auto insurance tax deductions cannot be taken into consideration until a deductible has been completely paid. Once the deductible has been paid, this deductible may be written off during tax season with respect to a tax return. However, this type of deduction does not apply to everyone. In order to find out what kinds of deductions can be make regarding vehicle insurance, it is advisable to speak with a certified accountant.
  • Considerations

    Tax deduction laws may be different for those that have had a vehicle lost, stolen or damaged. This type of deduction may be applied if an auto insurance company does not provide full reimbursement. Additionally, for the most part, small business owners can deduct car expenses (including insurance premiums) if their vehicle is used for business purposes. Those regular tax payers that don't use their vehicles for business related trips cannot deduct any kind of car insurance premium. Also, employees that use their cars for insurance purposes might be able to deduct car insurance premiums. However, if an employer pays for any car-related expenses, these deductions cannot take place.

  • More Information

    To find out further information regarding automobile insurance tax deductions, speak with an accountant. Or, take the time to research this issue further by contacting your insurance company. While a lot of tax laws may seem fairly cut an dry, this is not always the case. Some tax laws will change from person to person, and some laws will change based upon various state laws. If there is any doubt concerning taxes and tax deductions, only a qualified accountant will be able to answer these concerns for certain.
  • Warnings

    Attempting to deduct certain claims in regards to taxes may result in a large fine or audit. Every year, people make large deduction mistakes that end up costing a lot of time and money. Instead, take the time to find a reputable accountant. Further, consult the Internal Revenue website (listed below) for specific tax information. While some people might be able to deduct insurance deductibles on their taxes, others may not be able to deduct anything at all. In this instance, it is wise to proceed with caution during tax time.
  • Standard Deduction

    One last thing to consider is the standard deduction. Every American has the option to either itemize their deductions or take the standard deduction. Depending on your income and the deductible expenses you have, it may be more lucrative (and easier) to simply take the standard deduction. Ask your tax professional which is the best route before proceeding.
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