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DoGood
Level 2

How to deduct Roadside Assistance premium?

I have rental properties, some of which are more than 100 miles away from my home. I perform most, if not all, repairs and maintenance myself. I also drive used vehicles to get to my properties. I have the Premiere AAA Roadside Assistance coverage which I pay $119/year for the following coverage:

What is important to note, is that the AAA Roadside coverage is NOT specific to any vehicle I drive. In fact, the insurance protection covers ANY vehicle for which I'm the driver OR passenger. So, although I take the standard deduction via mileage for specific vehicles I drive, I don't believe this additional insurance coverage is vehicle-specific; and, therefore I am wondering if I'm correct that it is a separate deduction. I would like confirmation.

 

Is it necessary for my rental property business? For me, it is. Because on four occasions, my truck has broken down (once for a flat tire, once for a water pump failure, once for a cooling/heating hose burst, and once for a tie-rod failure). All four times were when I was going to/from my rental properties for maintenance/repairs. Having the tow back to my trusted, local mechanic allows repairs to move faster because my mechanic is a superman and, also I can pick up my vehicle quickly near to my home. The turnaround time for my vehicle repair is as fast as the same day depending on the scope of the repair so I can return to my rental to complete my rental repair in the committed timeframe rather than delay my visit to the next week or require me to coordinate with an alternate repairman/vendor to repair in lieu of me.

 

I have a full-time job during the week so most, if not all of my repair/maintenance visits, are on the weekends. If I have downtime on a Saturday and the vehicle repair is not going to be completed that weekend, I may need to reschedule for the following weekend with my tenants. With AAA, I can get towed, repaired, and back the next day. Or, I also have the option of dropping off my vehicle for repair, and if the repair is estimated to take a week, then I can get a rental car for the day from this coverage to get back out to my rental the same day! Without the insurance, it could be cost-prohibitive to have my car towed 100+ miles back to my mechanic and major delays would be anticipated in coordination time with an unknown repair shop where the vehicle broke down or delay just coordinating the ride to/from the repair shop.

 

For all the years I've had this coverage 100% of the service calls are rental related. However, I need to ask for clarification because the benefits of this insurance coverage do extend far beyond the scope of whether the incident was rental-related or not. It covers me ALL the time regardless of the purpose of my trip or which vehicle I'm in. I don't even have to be the driver of the vehicle as long as I'm in a vehicle it covers it.

 

Here is a reference to the coverage:

https://mwg.aaa.com/membership/aaa-membership-cost-compare-benefits

 

So, the questions are: 

  1. Does Roadside Assistance qualify as a separate deduction from my standard vehicle deduction?
  2. If yes, would I need to prorate the annual premium in any way to split either by use or benefit (i.e. attribution to a specific rental property or across all rental properties; or by use between personal and rental; or by benefit like if I actually used it that year for a specific property, the entire premium would be allocated to that one property for the year.)
  3. Also, if I can deduct, which tax deduction category should I include the annual premium under? If under Other Expenses what should I label it as?

Thank you in advance. I have searched for multiple responses, but I'm not finding an answer that fully addresses this topic.

1 Best answer

Accepted Solutions
Opus 17
Level 15

How to deduct Roadside Assistance premium?

Use of a personal vehicle for business is covered in chapter 4 of publication 463.

https://www.irs.gov/pub/irs-pdf/p463.pdf

 

You can't take anything for the roadside assistance plan if you use the standard mileage rate method.

 

You may be able to include roadside assistance if you use the actual expense method (it's not specifically included or excluded).  But, you would have to allocate the cost to the vehicle used for managing rental properties.  That means that in addition to tracking all the vehicle mileage and expenses for the vehicle in question, you would have to track the total yearly mileage for all vehicles covered by the roadside assistance plan, so you could properly allocate the cost.  

 

See also these prior discussions

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/rental-property-trave...

https://turbotax.intuit.com/tax-tips/small-business-taxes/business-use-of-vehicles/L6hi0zzzh

 

In short, this is listed as a vehicle expense on schedule E.  To use the standard mileage rate, you report the miles driven to each property.  The standard mileage rate includes allowances for fuel, repairs, insurance, maintenance, depreciation, and everything else.  The only thing you can add is tolls and parking.

 

To use the actual expense method, you must track all your vehicle expenses for the year, including insurance, repairs, maintenance, fuel, depreciation.  You must also track all your vehicle mileage for the year, both business and personal.  You then deduct a percentage of total expenses equal to the percentage of business miles.  And yes, this means that if you have a $1000 breakdown on the way to work on one of your properties, but your total yearly vehicle mileage is only 20% for managing the rental, you only deduct 20% of the cost.  For a service contract covering multiple vehicles, you will have to know the total of all vehicle miles driven.  For example, suppose vehicle A is used 12,000 miles during the year, of which 6,000 is for managing rentals.  The assistance plan also covers vehicle B (8000 total miles per year) and vehicle C (2000 miles per year).  54% of the assistance plan is allocable to vehicle A.  Then, you would deduct 50% of that allocation (27% net deduction) because vehicle A was used 50% for business.

 

On Schedule E, you would further allocate your miles to each property, but the final deduction will be based on total miles driven for work as a percentage of total miles driven for all purposes. 

 

The standard mileage rate is often more lucrative than the actual expense method, and requires much less record keeping. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

5 Replies
Bsch4477
Level 15

How to deduct Roadside Assistance premium?

Might be reasonable to total the business use mileage for all vehicles covered and divide that by total miles driven on all vehicles.  That would be the percentage of the premium you would deduct as supplemental vehicle insurance. 

Opus 17
Level 15

How to deduct Roadside Assistance premium?

Use of a personal vehicle for business is covered in chapter 4 of publication 463.

https://www.irs.gov/pub/irs-pdf/p463.pdf

 

You can't take anything for the roadside assistance plan if you use the standard mileage rate method.

 

You may be able to include roadside assistance if you use the actual expense method (it's not specifically included or excluded).  But, you would have to allocate the cost to the vehicle used for managing rental properties.  That means that in addition to tracking all the vehicle mileage and expenses for the vehicle in question, you would have to track the total yearly mileage for all vehicles covered by the roadside assistance plan, so you could properly allocate the cost.  

 

See also these prior discussions

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/rental-property-trave...

https://turbotax.intuit.com/tax-tips/small-business-taxes/business-use-of-vehicles/L6hi0zzzh

 

In short, this is listed as a vehicle expense on schedule E.  To use the standard mileage rate, you report the miles driven to each property.  The standard mileage rate includes allowances for fuel, repairs, insurance, maintenance, depreciation, and everything else.  The only thing you can add is tolls and parking.

 

To use the actual expense method, you must track all your vehicle expenses for the year, including insurance, repairs, maintenance, fuel, depreciation.  You must also track all your vehicle mileage for the year, both business and personal.  You then deduct a percentage of total expenses equal to the percentage of business miles.  And yes, this means that if you have a $1000 breakdown on the way to work on one of your properties, but your total yearly vehicle mileage is only 20% for managing the rental, you only deduct 20% of the cost.  For a service contract covering multiple vehicles, you will have to know the total of all vehicle miles driven.  For example, suppose vehicle A is used 12,000 miles during the year, of which 6,000 is for managing rentals.  The assistance plan also covers vehicle B (8000 total miles per year) and vehicle C (2000 miles per year).  54% of the assistance plan is allocable to vehicle A.  Then, you would deduct 50% of that allocation (27% net deduction) because vehicle A was used 50% for business.

 

On Schedule E, you would further allocate your miles to each property, but the final deduction will be based on total miles driven for work as a percentage of total miles driven for all purposes. 

 

The standard mileage rate is often more lucrative than the actual expense method, and requires much less record keeping. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

Carl
Level 15

How to deduct Roadside Assistance premium?

I have the Premiere AAA Roadside Assistance coverage which I pay $119/year

Personally, I would not waste my time on this. You're talking "maybe" $30 a year (probably less) you "might" be able to claim. That's not going to impact your tax liability by one single penny.

 

Mike9241
Level 15

How to deduct Roadside Assistance premium?

the standard mileage rate includes all expenses except tolls, parking., personal property taxes on the vehicle and interest expense incurred in financing it.

.

 

DoGood
Level 2

How to deduct Roadside Assistance premium?

Thank you for the thorough response.   I think I got hung up on the fact that the insurance doesn't really cover a specific vehicle, but me in getting to/from my rental properties to maintain and repair them. But, in the end, the deduction, even if I took it, doesn't amount to much.

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