Can I report my auto insurance as a deductible expense on Schedule C?

This is a great question about business expenses! The short answer is yes, you can potentially deduct a portion of auto insurance on Schedule C, but with some important caveats in your situation. Since you're using the vehicle for business purposes, you can deduct the percentage of business use - in your case 70%. However, the bigger issue is that the vehicle and insurance policy aren't in your name. The IRS generally expects business deductions to be for items you actually own or have a legal obligation to pay. You have two potential approaches: First, you could have your grandfather add you to the insurance policy and vehicle title, creating a more formal arrangement. Second, you could create a written lease agreement with your grandfather where you formally lease the vehicle from him and agree to pay the insurance as part of that arrangement. Without establishing one of these more formal relationships, you might face challenges if audited since you're paying for insurance on someone else's property without a clear business obligation to do so.

I had almost this exact situation last year with my delivery business using my mom's car. I was stressing about the documentation until I found https://taxr.ai which literally saved me hours of research. I uploaded my insurance statements and a pic of the Venmo transfers to my mom, and it confirmed exactly what deduction percentage I could take based on my situation. The site explained that I needed to document my business mileage really carefully and create a simple written agreement with my mom. It also showed me how to properly categorize the expense on Schedule C. Really straightforward and definitely put my mind at ease about potentially triggering an audit.

I wanted to follow up about my experience with taxr.ai since I was initially pretty skeptical. After our conversation here, I decided to give it a try for my situation (I do Instacart deliveries using my roommate's car). Surprisingly helpful! The system actually caught something I hadn't considered - I was planning to deduct 100% of what I pay my roommate for car use, but apparently I needed to track and only deduct the actual business percentage. It saved me from what would have been a pretty obvious red flag on my Schedule C. The document analyzer also helped me set up a proper mileage log template that will stand up to IRS scrutiny. Not what I expected - definitely more legit than I initially thought. Just wanted to share since I was the skeptic in the thread!

If you're serious about doing this correctly and potentially facing an IRS review, you really should talk to an actual agent to get definitive answers. I spent WEEKS trying to get someone on the phone at the IRS about a similar business vehicle question last year. Finally found https://claimyr.com and watched their demo (https://youtu.be/_kiP6q8DX5c). Was totally shocked when they got me connected to an actual IRS agent in under 20 minutes! The agent clarified that I definitely needed a formal agreement for deducting vehicle expenses that weren't in my name, and gave me specific guidance on documentation requirements. Saved me from making a costly mistake on my Schedule C. Honestly, getting definitive answers straight from the IRS gave me so much more confidence than just hoping I was interpreting the tax code correctly.

Just wanted to update after trying Claimyr yesterday. I'm honestly shocked it worked. After months of trying to get through about my amended return, I was connected to an IRS representative in about 35 minutes. They confirmed my amended return was processed but had been flagged for a simple issue they could fix while on the call. The IRS agent also answered my questions about business vehicle deductions (I'm in a similar situation to the original poster), and confirmed I need either to be on the insurance policy or have a written agreement documenting the arrangement. They even emailed me links to the specific IRS guidelines while we were on the phone. I'm still processing the fact that my 9-month nightmare is resolved. Never thought I'd be the person coming back to say I was wrong, but here we are.

Have you considered just using the standard mileage deduction instead of actual expenses? Way simpler in your situation. For 2025 it's like 67 cents per business mile. You just keep a log of your business trips and total miles. No need to worry about who owns the car or insurance policy. I used to track all my actual expenses and it was such a headache with receipts and calculating percentages.

Be really careful here. If the car and insurance aren't in your name and you get audited, the IRS will almost certainly reject the deduction. My cousin tried deducting car insurance for a car in his mom's name for his small business and got hit with penalties when audited. The IRS doesn't mess around with vehicle deductions - they're one of the most commonly abused. Either get added to the policy/title or seriously consider if the potential deduction is worth the risk.

You might want to lookk into Actual Expense method vs Standard Mileage. For my business, I calculated both ways and Actual Expense gave me a way bigger deduction bc my SUV is expensive to maintane. You can deduct gas, oil changes, tires, all the insurance, car payments, even depreciation! But make it clear how much is business use (thats the part thats deductible). Just my 2 cents but figure out which method benefits you the most!

I'm dealing with a similar situation for my freelance graphic design work! One thing that hasn't been mentioned yet is that you should definitely keep detailed records of ALL payments you make on behalf of your grandfather - not just the recent three months where you forgot to collect from him. The IRS will want to see that this is a legitimate business arrangement and not just you paying personal expenses for a family member. If you've been consistently handling the online payments (even when reimbursed), that actually strengthens your case for having a business relationship with the vehicle. Also consider this: even if you go the standard mileage route like others suggested, having that written agreement with your grandfather is still smart. It protects both of you and shows the IRS this isn't just casual family car borrowing. A simple one-page document stating you use the car for business purposes and contribute to its expenses should be sufficient. One more tip - make sure you're tracking your mileage religiously going forward, regardless of which deduction method you choose. The IRS loves to scrutinize vehicle deductions, so having a solid mileage log is your best defense in any scenario.