Understanding Car Insurance Deduction and Your Tax

​Are you curious to know if your car insurance is eligible to reduce your tax? When it’s time to file your tax, it can also be your chance to assert expenses throughout the year and obtain the most of the refund available. Have you asked your insurance agent if your car insurance premium tax-deductible? Read this post for you to be enlightened about this matter.

When is Auto Insurance Allowed for Tax-Reduction?
The manner in which you use your car will dictate if your auto insurance is whether tax-deductible or not.  Before diving into the main topic, it’s noteworthy to understand the following information. 

There are 2 primary forms of payment you’ll have to make linked to insuring your vehicle — your car insurance premiums and auto insurance deductible. Both of them can be written off. Also, you can request your insurer to have them deducted from your taxes if they meet the criteria.

Your car insurance premium is tax-excused only if you use your car for business. You may be able to take away your insurance deductible from your taxes. But, the course is more intricate than merely removing your insurance deductible from your taxable profits. Your insurance company can better explain all these when you talk to them.

Conversely, if the purpose of your vehicle is for personal, deducting your car insurance premiums on your tax return will not be possible. The privilege only applies only if you use your vehicle to the following:

• pick up or convey business supplies
• driving to meet clients
• driving to attend business meetings

Take note: Using your car to and from work isn’t considered as a business-related purpose.

Here’s the catch, there are two scenarios wherein you may have the chance to deduct a portion of your insurance cost, such as the following:

• You are self-employed and utilize your vehicle for business commitments.
• You work in a company, but your employer doesn’t pay you for expenditures linked to the business usage of your vehicle.

Bonus Info
A term popular in insurance companies, ‘write off’ means “total loss.”  When your car is written off by your insurer, you will receive payment of your insurer depending on the agreement when your vehicle is uneconomical to be fixed.

Ensuring your vehicle is vital as it will help you dodge situations that can bring you misery in the future. Get the necessary auto insurance plan from a trusted insurance provider. 

At Arnold, Bruce & Doerfler Insurance, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at  (503) 222-1951 or Click Here to request a free quote.