Is the Interest on Your Car Title Loan Tax Deductible?
March 11, 2019 | By Mason Roberts
There’s no shortage of tears during tax season, especially if you end up on the wrong side of what’s owed. But don’t let the fear of the unknown keep you from looking further than the proverbial nose of your paperwork.
It’s important to know what you’re working with, especially when it comes to tax deductibles, so you might be wondering—is the interest on my car title loan tax deductible? Well, I’ve got good and bad news for you.
The Bad News on Your Car Title Loan
Much like the interest on your mortgage, you might be wondering if the interest on your title loan is tax deductible. It’s a good question because those sums can wind up being quite the deficit, and what better way to gain from your loss than to deduct it from your potential taxes this year?
Unfortunately, if it’s a personal car title loan, the answer is no. The IRS does not allow interest paid on standard auto loans to be claimed as tax-deductible, nor any involved in title loans so long as it is a vehicle for personal use; however, did you notice a key phrase here? Vehicles for personal use cannot be claimed, which brings us to the good news.
The Good News on Your Title Loan
Alright, so it’s a bit of a bummer that you can’t take more advantage over your loan interest this tax season. Well, so long as it’s a personal car loan that we’re talking about. Cars for business? Well, that’s a whole other animal to wrangle. Car title loans on business vehicles are tax deductible. Even cars that are used simultaneously for both personal and business use are included!
So, if you are a business owner and somewhere down the line you have taken out a title loan on one of your work vehicles to help you cover the costs of some other business aspect, then you can file the interest as well as the cost of purchasing the vehicle itself on your business taxes.
Another fun fact? Any interest you pay on a business loan is tax deductible. This is not merely constrained to title or installment loans either—credit cards are included as well. If you do not already have someone to help you through the process of filing your business taxes and you are not an expert yourself, it might not be a bad idea to speak with a professional so as to not miss out on anything that can help you in the short and long term.
It’s important to note that if you are an employee for a business whose car you use, or in a situation where you must use your own car, it cannot be applied towards a write-off. You must be a business owner to utilize your loans and their interest in tax deductions.
Considering a Car Title Loan
Since you can receive a tax break on your business vehicle, a title loan could be a resourceful medium if you need some extra cash for another aspect of your small business. Approval is easy, and if you are just starting your business out and don’t have the credit to take out the money you need traditionally, a title loan on your business car could not only assist you with finances, but it will also allow you to continue to drive the car as you pay off the loan.
Getting your title loan tax break isn’t just a snap your fingers job, though. You will need the correct paperwork in order to file for the deduction, and you will need to file it correctly. Any receipts or paperwork for the title loan, as well as for the car itself, will be required to complete the write-off. As stated above, it might be best to seek assistance from a professional as taxes can get rather tricky.
Other Fun Deductions
While it might be a bummer that you can’t deduct your personal title loan, there are some other lesser known write-offs in the tax realm. It’s time to use every weapon in your arsenal, and remember, these aren’t the only ones—you can look into even more if these don’t apply to you!
Did you know that if you have a guard dog or pest control cat for your business, you can claim their costs as tax deductible? You must keep a record of the dog’s work hours, and if you are using a cat to keep other critters out, it must be common in your line of work. Service animal costs are similarly categorized in this way, so you can list that down as a deductible as well. You can also claim costs for fostering animals, which can be a huge help as pet food and upkeep, especially vet visits, can become trifling.
Bet you didn’t know you could claim costs towards higher education, did you? Up to $2,000, in fact. Of course, the filing for scholarships and financial aid gets convoluted, but keep this in mind while filling out the boxes. Specialized uniforms, such as scrubs or other gear, can be deducted as they are a requirement for work and not suitable for general wear. If you owed on last year’s taxes, you should also include that with your state tax itemized deduction for this year’s taxes.
If you have decided to throw away the tobacco stick, you can potentially list any cessation programs, patches, etc. as a write-off. Who knew quitting smoking could be so beneficial? Uh, well, I suppose that’s a no-brainer—cancer isn’t fun, nor is yellow teeth or sallow skin. Nor is losing weight, especially if it’s your first time really attempting to shave off the pounds.
If ordered by a doctor, programs and costs towards losing weight can also be written off. Even pregnancy tests can be listed! There’s a lot more you can look into, you just have to put a little bit of elbow grease into your google research.