Can the Mileage & Gas For Drive to Work Be Tax Deductible?
When you are working for a company as an independent contractor, you may take certain deductions as business expenses. As an employee, these deductions are limited or nonexistent. Deducting mileage and gas expenses must be done according to IRS regulations.
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Actual Expenses
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The IRS allows you to deduct the expenses of running and maintaining your vehicle for business purposes. You may not use the car for personal use and deduct expenses for business use. If you do operate the vehicle for personal use, you must calculate the percentage of time the vehicle is used for business, based on mileage driven, and deduct only that percentage. For example, if you drive the vehicle 100 miles, but use 50 miles for personal use, you may only deduct 50 percent of the cost of the gasoline you put in the tank.
Mileage
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You may use a straight mileage deduction. The IRS allows you to deduct mileage you drive in lieu of the actual expense method. You record the miles you drive for business. Then, you multiply those miles by the deduction amount published by the IRS each year. The resulting dollar amount is the amount of your deduction for mileage.
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Warning
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You cannot deduct both gasoline costs and mileage. The IRS explicitly prohibits this.
Consideration
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Compare both methods of deduction. The actual expense method allows you to deduct gasoline and more. These expenses may be significant. But you'll never know what that means unless you compare it to the mileage deduction. Whichever gives you the greatest savings is the one you should use. Also, do not deduct mileage you incur going to and from your work. Unless you have a home office and are traveling to work-related job sites, the IRS will disallow any mileage you rack up in commuting to your job.
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