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No deduction for employee’s car payment

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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.

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