Damage Deductions

Michael Sheehan

Physician's Money Digest, October31 2004, Volume 11, Issue 20

If you use an older car to run errandsaround town, there's a good chance itdoesn't have collision insurance. If you getin an accident, can you write off the losson your income taxes? Maybe, but it'sdoubtful. The first hurdle is that the lossmust be more than 10% of your adjustedgross income. If that figure is $100,000,for example, your loss must exceed$10,000, which is most likely more thanthe car is worth. If you have other casualtyor theft losses, however, you can addthem to the car loss to go over the threshold.Next, there's no deduction for thefirst $100 for each loss. The car must alsobe registered in your name; if Junior totalsa car that's in his name, you get no deduction,even if you paid for it.