A Quick Guide to Tax Deductions For Boaters

March 12, 2021

If you own a watercraft, you might be entitled to tax deductions depending on how you use it. Rather than missing out on deductions that can lower your income taxes this year, review write-offs your Los Angeles accounting service wants you to know about. 

If You Use the Boat For Business Purposes

Perhaps you engage in commercial fishing, or provide charter services for area tourists. No matter why you utilize the vessel for business reasons, you can deduct expenses at tax time. Fuel and maintenance costs, insurance, drinks and snacks for clients, fishing tournament entry fees, and marina fees all apply. Keep track of all commercial expenses to make things easier when you’re doing your taxes. 

Remember that if you provide charter services, you’ll need your U.S. Coast Guard license to have at least six people legally on board. Charter boat deductions include depreciation, mooring, and boat equipment purchases in addition to the above write-offs. 

If You Use the Boat as Second Home

Enjoying the vessel as a second home allows you make deductions assuming the boat features a permanent gallery, berth, and bathroom. Even if the bathroom consists of a toilet and sink, you can still write off interest using IRS Form 1098, as well as deep boat cleaning and maintenance. Docking and insurance costs also provide deduction opportunities. 

If You Donate the Boat to Charity

Perhaps you donated the vessel to a charitable organization in the past year and upgraded to a bigger boat. While you can only deduct the fair market value, you’ll nevertheless enjoy a considerable tax break. Any charity applies assuming it is an NGO, or non-governmental organization. Some charitable groups, such as Sea Scouts, document the tax donation for you for easier preparations. 

If You Use the Boat to Commute to Work

Should your boat function as your way to work at least 50% of the time, you’ll enjoy deductions. Write off fuel costs, repairs, insurance, crew salaries if applicable, hurricane storage, depreciation, and dock fees. However, if you use the boat for charter purposes, you cannot use the transportation deduction. 

Get help this tax season with services from Wallace & Associates. The Encino tax consultants provide accountant services to clients throughout Los Angeles, including tax prep.