Can You Deduct Car Expenses if You Don’t Own the Car?

6428026731_6c0ec94af4_zIt depends.

Car expenses can represent a substantial business deduction for family child care providers. It’s also a common subject of IRS audits.

If you are married

You can deduct expenses for your vehicle or your spouse’s vehicle, regardless of who owns it.

It only matters what is the “primary purpose” of each trip. If the primary purpose (more than half the reason for the trip) is business, then you can deduct expenses associated with the trip.

So, if your husband drives his car to the store to buy items for your business, and that’s the primary purpose of his trip, you can deduct the expenses associated with the trip. It doesn’t matter who owns his car.

You can either use the standard mileage rate or the actual expenses method to deduct car expenses. You can use one method for your vehicle and the other method for his vehicle.

If you are not married

You can only deduct car expenses associated with a car that you own.

If your friend/relative drives you to a business destination in their car, you can’t deduct car expenses associated with this trip.

However, if you pay the person who owns the car to transport you, you can deduct this payment as a business expense. (Note: the primary purpose of the trip still needs to be business.)

The owner of the car must report as income any money received by you as income.

If you don’t own a vehicle, is this a reason to marry your partner who does owns a vehicle? You decide!

Tom Copeland – www.tomcopelandblog.com

Image credit: https://www.flickr.com/photos/nrmadriversseat/

2014 TW smallFor more on car expenses, see my annual Family Child Care Tax Workbook and Organizer.



Categories: Car Expenses, Record Keeping & Taxes

32 replies

  1. Hi Mr. Copeland,
    I appreciate your detailed information, it is very helpful. I do have an important question concerning the vehicle I have been using for my sole proprietor business. I was given a car by my parents. My husband picked the car up and then titled and registered it. Because I was not with him my name could not be placed on the title. I didn’t think much about it…until now. Since the car was in my husbands name only, it seems I cannot claim the standard (mileage) deduction. Yet, when I read your article above, I get the impression, if my spouse owns the car, I can claim the mileage vs. the expense method. Can you clarify this for me?

    • Because you are married to the person who owns the car, you can claim car expenses, including using the standard mileage deduction.

      • Thank you so much, using the standard mileage deduction is exactly what I was hoping for, especially in light of the fact that, if I had to go the expense route, I would not be allowed to use the standard rate in the future.
        You have been a huge help, thank you!

  2. In regards to the above. My roommate uses my vehicle for business purposes. He is self employed. Can he write this off as a business expense? Also, the mobile phone is in my name as well, however, he uses the phone for business purposes. Can that be written off? Thank you!

    • Since your roommate doesn’t own the vehicle he is using, he can’t claim car expenses unless he pays you for using the vehicle. Same answer for the phone.

  3. My son still lives at home and has a small amount of self-employment income…we gave him a car when he got his license, but it is still titled in our name, can he still take the mileage deduction? It’s his car, but we have never transferred it over to him.
    Thank you!

  4. I started work as an independent contractor doing home therapy in 2016… I want to use the mileage deductions… the car I have been using is under my father’s name (although it’s been my car ever since we bought it)… does that mean I can not deduct those miles?

  5. I’m pretty sure you’ll answer I cannot deduct that based on your other answers to questions.. I do have another question if you could advise…

    I read that, if you don’t use standard mileage in the first year you use your car for business, then you you are forever foreclosed from using that method in future years…

    so in my case since I have been using my dad’s car in my 1st year doing home therapy and won’t be deducting mileage for 2016, if I buy my own car this year does the above rule not applied to me b/c my first year using my car (registered to me) will be 2017?

    • Yes, if you use the actual expenses method in the first year you use your car for your business, you must continue using that method for the life of hat car. Meaning, you can switch to the standard mileage method in later years.

      You can’t claim expenses for your father’s car because you don’t own it. Once you start using your own car in 2017 you can choose to use either the standard mileage method or actual expenses method because 2017 will be the first year using that car for your business.

  6. Hey Tom,
    I am in a similar situation as the people above. If the title is changed to my name from my parents name, say tomorrow (2017), can I claim the mileage I used for business in 2016 when it was not under my name?

  7. Please how can I calculate the depreciation for an old 2001 Toyota Sienna that I used in 2016 for my self employed. Also, if I don’t have all of the receipts for repairs, parts and maintenance that was done, can I still deduct those expenses or not?

    Thanks in advance.

    • You have two ways you can claim car expenses. You can use the standard mileage rate ($.54 for 2016), plus a portion of car loan interest and any parking expenses. Or, you can save all receipts associated with your car and deduct a portion of these expenses, plus depreciation. You would base the depreciation on the value of the car as of 2016. Since you don’t have all your car receipts, you may be better off using the standard mileage method.

  8. I have another question Tom. I do home health so I do multiple business related trips a day. It’s my understanding that the first trip from home to business and the last trip from business to home are considered commute. Let’s say before going on my first trip from home to business I want to go to dollar tree store and buy supplies for work. So does the trip from dollar tree to my first business destination count as business?

    Thanks a bunch!

  9. No. Any trip from your home to a place of business is commuting and not deductible. So, if you leave home, go to the dollar tree to buy something for your business and then continue on to your place of business, this is not a business trip. That’s because the primary purpose of that trip was to get to your place of business. If you left home, went to the dollar store and then returned home, that’s a business trip. If you went to your place of business then went to the dollar store and then returned to your place of business, that’s a business trip.

  10. I was divorced in 2016 and my ex-wife uses my one of the vehicles in my name for her business. I pay for the vehicle and allow her the use of it. She has racked up 20K miles this year using it for HER business which I have nothing to do with. Is there a way I can deduct some of this mileage expense considering it is my vehicle? Thank you!

    • No, you can’t deduct expenses associated with the car because you didn’t use it for your business. She can’t deduct expenses for the car because she doesn’t own it and she is no longer married to you.

  11. Hi Tom

    Your article is very information. Thank you for that.

    I drove UBER for a few months last year 2016. The car registration is in the name of both my spouse and my child.

    Because the car is owned by my spouse, can I claim standard milage deduction on our joint tax file return this year 2017, for the actual miles UBER has recorded that I have driven for the rides I have given.

    Would appreciate your reply.

    Thank you

    • Yes, you can use the standard mileage rate even if the car is in the name of your spouse.

      • Thank you Tom. Truly appreciate it. This is immensely helpful.

        One question –

        I don’t see any field in the tax form where I can specify that the car is in the name of my spouse.

        While filing for the tax, how do I indicate in turbotax that the car is in the name of my spouse to avoid any confusion?

        Thank you very much for your reply.

  12. Thank you Tom. Truly appreciate it. This is immensely helpful.

    One question –

    I don’t see any field in the tax form where I can specify that the car is in the name of my spouse.

    While filing for the tax, how do I indicate in turbotax that the car is in the name of my spouse to avoid any confusion?

    Thank you very much for your reply.

    • You don’t need to enter into Turbo Tax whose name is on the car. As long as you are married you can claim car expenses on a car owned by your spouse. So, there is no reason to enter this information anywhere.

  13. If I rent a car to drive Uber, can I deduct the rental as an actual expense?
    I imagine then I can deduct the gas and insurance I also pay as an actual expense?

    Then my question is after reading other posts here is if a drive a relatives car I should be able to deduct actual expenses related to my business as well. I paid the gas to operate my business just as a phone or any other business expenses.

    • If you are using a rental car as a driver for Uber, you can deduct the business portion of the rent, gas, insurance and all other car expenses for that business.
      If you drive a relatives care for a business you can only deduct gas or other car expenses if you pay the owner of the car rent to use the car. The owner of the car would then have to report this rent as income.

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