Self-Employed Tax Deductions for Cars

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Making business calls on the road does not make the trip deductible.
Making business calls on the road does not make the trip deductible. (Image: JGI/Blend Images/Getty Images)

If you use your car in the course of your business, you may have a tax write-off. As a self-employed person, you deduct car expenses on Internal Revenue Service Schedule C, the same form on which you report your business income. Driving for business is deductible, but you have to use the IRS' definition of business travel, not your own.

Commuting Isn't Deductible

Your daily commute to work isn't a business trip in the eyes of the IRS. The agency counts commuting as personal travel, so it's not a write-off. If you drive from your workplace to a second job site or to meet a client, that's deductible. So is driving from a home office to such meetings. Putting your business logo or advertising on the car does not make personal travel into a business trip. Neither does carrying tools, a laptop, files or other items you need for work.

What You Can Deduct

The simplest way to claim expenses is a per-mile deduction. As of the time of publication, the IRS sets the business travel write-off at 57.5 cents per mile. The alternative is to deduct the share of car expenses -- gas, oil, repairs, maintenance, new tires -- attributable to business trips. If 40 percent of your driving for the year was business, for instance, you can deduct 40 percent of your expenses. You can write off the cost of parking fees and tolls even if you take the per-mile rate, except for the cost of parking at your workplace.

Keeping Records

If the IRS audits your business, you'll need records to prove your write-off is legitimate. For the per-mile deduction for a particular trip, you need the number of miles, the destination and the business purpose. To deduct actual expenses, you need sales receipts, credit-card receipts, canceled checks or other proof of what you spent, plus a record of your total mileage and business mileage for the year. If you have a regular route -- you visit the same customers on a weekly basis, say -- a couple of months of records may be enough evidence.

How to Report

Report your car write-off on the front of Schedule C. The per-mile deduction goes on Line 9; actual expenses go on the same line, except for depreciation on the car, which goes on Line 13. Use Part IV on the back of Schedule C to provide information about your vehicle, such as when you began using your car for business and how much business driving you did. If you claim depreciation on the car -- a loss of value due to aging -- you also have to fill out Form 4562.

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