The catalytic converter (CC) in my Prius was stolen 40 days ago. CC are on massive backorder in California. I have exhausted my insurance rental car coverage and now have to pay out of pocket. I need the car to commute to work. I would like to understand if the rental car cost can be tax deductible. Thanks!
Employee business expenses are not deductible on a federal tax return due to the tax code changes in effect for tax years 2018 thru 2025.
Casualty and Theft losses are not deductible on a federal tax return, unless the loss occurred in a federally declared disaster area.
Commuting expenses are never deductible, before or after tax reform, for W-2 workers or self-employed.
If you are self-employed, you can deduct your work mileage whether you use your own car or a rental. You can't use the standard mileage rate for a car you don't own, so you would have to use the actual expense method, that would include the rental fees and fuel.
The difference between deductible work mileage and non-deductible commuting mileage is described in chapter 4 of IRS publication 463.
Quote: "Casualty and Theft losses are not deductible on a federal tax return, unless the loss occurred in a federally declared disaster area."
I'm fairly certain theft losses do not need to occur in a federally declared disaster area to be deductible on a federal tax return. I believe that's true only for personal casualty losses.
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