No deduction for employee’s car payment — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

No deduction for employee’s car payment

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Q: I bought a car this year that I used for my sales rep job. My company reimburses me for travel but not the interest I'm paying on a car loan. Can I deduct the interest as a business interest expense? E.L., Islip, N.Y.

A: No. An employee's interest expense—regardless of whether it's attributable to performing services for the employer—is generally treated as nondeductible personal interest. (IRS Temporary Regulation 1.163-8T(b)(7)) But if you operate a self-employed business, you can deduct the interest expense on Schedule C. Also, remember that you can deduct other unreimbursed employee business expenses as miscellaneous expenses once they've surpassed 2 percent of your adjusted gross income.

Leave a Comment