Who can legally claim auto insurance as a business expense on taxes?

But what if they formalized the arrangement? Like if the brother officially "rented" the car to OP for business use? Would that create a path for the deduction?

That's a good question. Formalizing the arrangement with a rental agreement could potentially create a legitimate business expense, but it also creates other complications. If they created a formal vehicle rental arrangement, the brother would need to report the rental income on his taxes, and the OP could potentially deduct the rental expense (which could include insurance costs). However, this creates more paperwork and potential tax liability for the brother, so they would need to carefully consider if the potential deduction is worth the additional complexity.

How exactly does this work? Does it just give general advice or does it actually tell you what specific deductions you're eligible for? I've been burned by tax software that promised to find deductions but just asked the same basic questions.

I'm skeptical - how is this different from just talking to an accountant? Seems like another AI tool that just regurgitates general info you could find on IRS.gov for free.

It goes beyond general advice by analyzing your specific documentation and financial relationships. After uploading my bank statements and receipts, it identified several legitimate deductions I was missing, including some unusual situations like the one you're describing with payments made through intermediaries. It's different from a regular accountant because it's available 24/7, costs far less, and compares your situation against thousands of similar tax scenarios to find optimization opportunities most accountants might miss. Unlike generic AI tools, it's specifically trained on tax code and IRS guidance documents with specific recommendations tailored to your documentation.

Wait, you can actually get through to a real IRS person? Last time I tried I was on hold for 2.5 hours and then the call dropped. How does this actually work? Do they just keep calling until they get through?

This sounds like a complete scam. There's no way to "skip" IRS wait times - they're notoriously understaffed. I'd be careful giving any service your info that claims they can magically get you to the front of the line.

Yes, you actually can get through to a real person! The service doesn't "skip" lines in the way you might think - they use an automated system that continually redials and navigates the IRS phone tree until it gets through, then calls you when a real person is on the line. It's basically doing the waiting for you so you don't have to sit there listening to hold music for hours. It's completely legit - they don't need any sensitive information, just your phone number to call you back when they get an agent on the line. I was skeptical too until I tried it and got connected to an IRS representative who answered my specific question about business expense documentation.

Thanks for the suggestion, but unfortunately it's not that simple in our case. My brother has a multi-car discount policy that would be significantly more expensive if we split it up. Also, his driving record is better than mine, so our total costs would increase by about $780/year if I got my own policy. That's why we've kept this arrangement going. I'm wondering if there's a way to make it work tax-wise without actually changing the policy.

That makes sense about the multi-car discount. In that case, I'd suggest creating a formal agreement between you and your brother. Have him "bill" you for the insurance with a simple invoice each month, and pay him by check or electronic transfer that clearly states "vehicle insurance" in the memo/notes. Keep these records organized. This creates a paper trail showing you're paying for a legitimate business expense. On your Schedule C, you'd list it as "vehicle insurance" under car expenses. Just be aware you can only deduct the percentage used for business - if you use the car 60% for business and 40% personal, you can only deduct 60% of what you pay.

This is the correct answer. The "substance over form" doctrine is exactly what the IRS would apply here. It doesn't matter whose bank account the payment comes from - it matters who is the economic payer. If brother gives cash first, then brother is the economic payer.