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Recently I paid a lot (almost one month of my salary) for repairing my car. I am wondering if there is a way to get deduction on federal or state taxes (USA, California).

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Is the car used as a part of your business? –  mhoran_psprep Jan 31 '13 at 0:55
    
No, I am student. I use my car for my personal uses. –  Reza Jan 31 '13 at 1:03
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No deduction. Not business, and not any kind of casualty loss. –  JoeTaxpayer Jan 31 '13 at 1:51
    
@Joe, how about casualty loss? If the repairs were due to an unexpected and sudden casualty (i.e.: you were involved in an accident, not forgot to change the oil for a year), then you can try that for deduction. There are high thresholds though, especially if you're a high earner. –  littleadv Jan 31 '13 at 2:14
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@Joe he's from Cali. Its not that hard to get over the standard deduction with the state taxes:) –  littleadv Jan 31 '13 at 4:57
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1 Answer 1

Unless you own a business and the car is used in that business you can't write off your auto repairs.

If you start a sole-proprietorship in your own name there are all sorts of things you can write off as long as there is a reasonable expectation of profit. This includes a portion of your car repairs, a portion of your home expenses (assuming it's a home-based business), any tools used in the business, all kinds of stuff. The portion of your auto is based on total miles driven in the year vs. total miles driven for business purposes. Eligible auto expenses include repairs, gas/oil, insurance, parking, and interest on the auto loan.

There are some things to remember:

  • You cannot start a business to lose money. The tax department doesn't condone that.
  • If you are a sole proprietor the net income from your business is added to your regular income and you are taxed on that at individual rates, not corporate rates.
  • If your business expenses exceed your business income, you cannot use the loss to reduce your personal income. Depending on your jurisdiction you may be able to carry forward those losses to future years.
  • Expenses incurred after the business is formed are deductible from business income, expenses incurred before the business is formed are not. The strategy above is applicable to the OP's future big car repair bills.

I'm no expert on California business law. Talk to a lawyer and an accountant if you wish to go this way. Many offer a half-hour free session for new clients.

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But the business would be created after the repair. –  mhoran_psprep Sep 24 '13 at 0:11
    
In this particular instance, yes. Future car repairs would be eligible for deduction after the business is formed. –  Jerry Penner Sep 24 '13 at 12:40
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