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How do I claim car loan interest on my taxes?
I've read that I can write off car loan interest on my taxes. Is this true? How do I do it?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Seeking out write-offs is a great way to save money when filing your taxes! But not everyone can claim
car loan
interest on taxes, so you’ll need to make sure you qualify before doing so.If you’re using the car for personal use only, you cannot write off car loan interest—nor can you write off mileage or car-related expenses. However, if you use the car for business 50% or more of the time it’s driven, you can cut your tax liability by deducting car loan interest.
To calculate the interest, take a look at your loan statement and add up how much you’ve paid over the year. Then, determine the percentage of time you drive the vehicle for business use. (You will need to provide records for proof.) This is the percentage of the total car loan interest paid that you can write off on your business taxes.
As a business owner, you can also write off car-related expenses, including:
- Mileage (57.5 cents per mile)
- Personal property tax
- Tolls and parking fees
You will need documentation of this, as well. Receipts, bills, and similar documents will suffice.
In addition, you should be able to write off your car insurance on commercial vehicles, which can amount to a substantial chunk of change!
But the buck stops there when it comes to personal car insurance—you cannot write that off your taxes. However, you can likely lower your car insurance bill by downloading the
Jerry
app for free.Jerry is an insurance comparison app that shops for low prices with over 50 different insurance companies for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away!
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- Gregory R.
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