Business Driving Expenses – What’s Deductible and What’s Not?

There are many business driving expenses that business owners and employees can deduct if they use their car for work purposes. However, in order to write-off any driving expenses, the usage must qualify as business related and the IRS must receive the proper documentation at tax time. Of course, if you have concerns about what business driving expenses you can, and can’t, write-off it’s best to consult a tax professional.

What Business Driving Expenses Qualify as Tax Write-Offs?

There are two ways to write-off auto expenses if you use your vehicle for business purposes – actual expenses and standard mileage deduction.

Actual Expenses

These are expenses that result from driving your car for business. Some examples include:

• Gas
• Lease payments
• Vehicle registration and title fees
• Insurance
• Repairs
• Depreciation
• Oil
• Tolls
• Parking fees

Standard Mileage Deductions

The standard mileage deduction is much simpler to calculate than deducting actual expenses. In order to calculate the standard mileage deduction, simply multiply the total business miles driven during the year by the current business mileage rate. For example, the IRS’s business mileage rate for 2017 is 53.5 cents per mile. Therefore if you drive 4,000 miles this year, you’d multiply 4,000 X 0.54 to determine a tax write-off of $2,160 for the year. However, the amount that you may deduct for each mile changes almost every year.

What Business Driving Expenses Don’t Qualify as a Tax-Write Off?

Any personal use of a vehicle cannot be used as a tax write-off. All personal use must be completely separated from business driving expenses. It doesn’t matter whether you’re driving a personally-owned vehicle or a business-owned vehicle, personal driving expenses are never tax deductible. In addition to personal driving expenses, there are several other business related driving expenses that are not eligible for a tax write-off:

• Commuting expenses to and from work.
• Using a vehicle to transport business materials or make business calls during the commute.
• Commuting costs from your home to a temporary worksite, such as a construction site or alternate office branch.
• Commuting costs between a primary job and a part-time job.

For further assistance determining exactly which driving expenses qualify as a tax write-off contact the financial professionals at USA Tax Prep Plus today!