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Get tax dollars for business car repairs

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. My car was damaged in an accident. I use the car about 80% for business, but I was on a personal errand. Can I still deduct the repair cost? C.Z., Akron, Ohio

A. Yes. Your deduction is based on the percentage of business use, not the use at the time of the accident.

For instance, if you pay $1,000 after receiving insurance proceeds to repair a car used 80% for business, your deduction is $800 (80% of $1,000). In comparison, to deduct personal casualty losses and thefts, including costs attributable to auto collisions, you must reduce each casualty event by $100 before applying a floor of 10% of adjusted gross income (AGI).

Tip: You can increase your repair cost deduction by using the car more for business use for the remainder of the year.

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