Those are already included in the IRS's standard rate. With this method, you won't be able to claim gas - or other expenses like insurance and tires - as separate expenses at all. What you can write off with the standard mileage method It's $0.585 for the first half of the year, but thanks to rising gas prices, the IRS raised it to $0.625 for the miles you drive from July to December.) Then, just multiply your business mileage by a standard mileage rate set by the IRS, which is updated annually. To calculate your deduction using the standard mileage rate, you'll first have to track your miles using a mileage log or app. (Keep in mind that commuting miles don't count! You can read more about the difference between them in our post on business vs. This gives you a tax deduction based on the number of miles you drive for work. The other method you can use to write off the business use of your car is the standard mileage method. Incorporating gas expenses into the standard mileage rate And that's very good news, since most freelancers tend to save more using this method. Keeper takes the tedium out of tracking your actual costs. These days, though, apps like Keeper can do all the expense tracking for you by automatically scanning your credit card and bank transactions for car expenses. This method does require you to track all of your vehicle expenses, which made it a less attractive option to self-employed taxpayers in the past. Here are some of the other costs that it covers: The actual expense method lets you write off your business-use percentage for everything you spend on your car, including your gas or diesel fuel. What you can write off with the actual expense method Then your business-use percentage for your car would be 50%. Otherwise, though, you'll have to write off a portion of your expenses, corresponding to how much you drive your personal vehicle for business purposes.įor example, say you drove 10,000 miles in a year, with 5,000 of those being business miles. That means that, if you have a car you only use for work, you can deduct the entire cost of operating it. Then, you'll multiply that sum by your business-use percentage - that is, the percentage of the time you're putting your vehicle to business use instead of personal use. Using this method, you'll keep track of what you're actually spending on your car, including the cost of gasoline. Writing off gas expenses with the actual expense method You'll have to pick the former if you want to deduct what you're actually spending on gas. There are two ways to write off car-related expenses on your tax return: the actual expense method and the standard mileage method.
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