# Can I claim deductions if the car is not in my name?



## KayakTony

I took over payments on my brother's car, but the car, and the registration, is still in his name. The insurance is in my name. I make all payments regarding insurance, tag, car payment, etc. Can I claim tax deductions for gas, mileage, etc. for times that I am working?


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## Disgusted Driver

I would think that if you are paying them then yes you can. Keep in mind that you deduct EITHER mileage OR actual expenses. Mileage is much easier to calculate and usually works better unless you drive few miles and/or have expensive repairs.


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## KayakTony

Thank you for your response, and the reminder regarding mileage or expenses...I always been really leery regarding claiming things unless I know for certain it won't come to bite me in the future. My guess is that as long as my brother doesn't claim anything on the car, I will be OK...Maybe I need to consult with a professional. Thanks again.


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## UberTaxPro

KayakTony said:


> Thank you for your response, and the reminder regarding mileage or expenses...I always been really leery regarding claiming things unless I know for certain it won't come to bite me in the future. My guess is that as long as my brother doesn't claim anything on the car, I will be OK...Maybe I need to consult with a professional. Thanks again.


The car must be titled in your name to claim the standard mileage deduction The only exception is with spouses filing jointly. Sorry. You can however deduct the business % of your expenses (except depreciation) for this vehicle using the actual expense method.


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## KayakTony

UberTaxPro said:


> The car must be titled in your name to claim the standard mileage deduction The only exception is with spouses filing jointly. Sorry. You can however deduct the business % of your expenses (except depreciation) for this vehicle using the actual expense method.


Thank you for your response. Are you certain about that? I just spoke to someone at HR Block who said that as long as I have a *notarized letter from my brother claiming that I have assumed all responsibility for the vehicle, and can provide proof of all payments/mileage, i should be OK. Now I am really confused. Thanks again for your answer. Much appreciated.


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## Older Chauffeur

KayakTony said:


> I took over payments on my brother's car, but the car, and the registration, is still in his name. The insurance is in my name. I make all payments regarding insurance, tag, car payment, etc. Can I claim tax deductions for gas, mileage, etc. for times that I am working?


The IRS rules state that you must own or lease the car. Is there a reason he has not signed it over to you? For example, is the lender aware that you took over the payments? I'm guessing not, as the registration probably would have been processed at that time. If the bank doesn't want to take your brother off the loan, maybe they would add you to it and thus your name as a co-owner.

Same thing for insurance- they are insuring a car not registered to the policy holder/named insured? Does it happen to be with the same company your brother used? Maybe a clerk didn't notice if the surname is the same.

If you can, it would be a good idea to get this all cleared up. Also, do you have rideshare gap insurance?

Putting all that aside, if you were to be audited by a sharp-eyed IRS agent, the ownership issue might cause problems. You might convince them based on your records/receipts that you own the car. Otherwise, if you have a contemporaneous business mileage log to substantiate your expense claim go for it.

Disclosure: I'm not a tax professional. UberTaxPro is, and maybe he will weigh in on how important the registration is to the IRS.
Edit: I see that he already did.
*Topic 510 - Business Use of Car*

If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation (subject to limits discussed later). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.

You can generally figure the amount of your deductible car expense by using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, you may want to figure your deduction both ways before choosing a method to see which one gives you a larger deduction.

*Standard Mileage Rate -* For the current standard mileage rate, refer to Publication 463, _Travel, Entertainment, Gift, and Car Expenses_, or search standard mileage rates on IRS.gov. To use the standard mileage rate, you must own or lease the car and:


You must not operate five or more cars at the same time, as in a fleet operation,
You must not have claimed a depreciation deduction for the car using any method other than straight-line,
You must not have claimed a Section 179 deduction on the car,
You must not have claimed the special depreciation allowance on the car,
You must not have claimed actual expenses after 1997 for a car you lease, and
You can't be a rural mail carrier who received a "qualified reimbursement."

To use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use the standard mileage rate or actual expenses.


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## KayakTony

Thanks so much for your informative response. Regarding the insurance: yes, you can get insurance on vehicle that is not registered to you. It is much more expensive, and most companies don't offer it...but it is there. I just wrote a check for over $2000.

We decided not to put the car in my name in order to save the tax $$$ (over $1500), as well as new registration fees, which will coast almost $400, and we just purchased new state registration and two additional years for over $500. I took over payments a month after he bought the car, when he got a new job and needed a different vehicle for work purposes, so he had already paid over $1500 in taxes. Also, his credit is better than mine, so if he sold it to me, not only would we have to pay taxes again, and pay for new registration, it would be at a higher interest rate. Changing the car into my name will cost $2000 immediately, and about $2500 more in the long run. 

That being said, I often hear, "This is the nicest Uber I have ever been in"...the car is cleaned/vaccuumed every day. I pay all the bills on time. It's just a crappy situation. 

You cannot add someone to vehicle registration, unfortunately. Yes, I could be added to the loan, but that would not solve the registration/ownership problem. 

Thanks again for your response. It was nice of you to take the time to do so.


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## Older Chauffeur

KayakTony said:


> Thanks so much for your informative response. Regarding the insurance: yes, you can get insurance on vehicle that is not registered to you. It is much more expensive, and most companies don't offer it...but it is there. I just wrote a check for over $2000.
> 
> We decided not to put the car in my name in order to save the tax $$$ (over $1500), as well as new registration fees, which will coast almost $400, and we just purchased new state registration and two additional years for over $500. I took over payments a month after he bought the car, when he got a new job and needed a different vehicle for work purposes, so he had already paid over $1500 in taxes. Also, his credit is better than mine, so if he sold it to me, not only would we have to pay taxes again, and pay for new registration, it would be at a higher interest rate. Changing the car into my name will cost $2000 immediately, and about $2500 more in the long run.
> 
> That being said, I often hear, "This is the nicest Uber I have ever been in"...the car is cleaned/vaccuumed every day. I pay all the bills on time. It's just a crappy situation.
> 
> You cannot add someone to vehicle registration, unfortunately. Yes, I could be added to the loan, but that would not solve the registration/ownership problem.
> 
> Thanks again for your response. It was nice of you to take the time to do so.


You're welcome. Sounds like it's going to depend on if you want to risk an audit. Worst case, they disallow the mileage expense. And maybe they accept your ownership arrangement. Good luck.


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## UberTaxPro

KayakTony said:


> Thank you for your response. Are you certain about that? I just spoke to someone at HR Block who said that as long as I have a *notarized letter from my brother claiming that I have assumed all responsibility for the vehicle, and can provide proof of all payments/mileage, i should be OK. Now I am really confused. Thanks again for your answer. Much appreciated.


"should be OK" If I were you I'd ask that tax preparers supervisor what "should be OK" means. To me it means that if you're audited you'll be able to convince the IRS that a notarized letter = bill of sale. Yes, it's possible to convince the IRS to accept your notarized letter instead of a bill of sale or lease document but they would be under no obligation to do so and I would never want to put a client in a position that can't be defended by the tax law.


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