If you use a personal vehicle for business reasons, you can take many deductions for your car. This potentially includes the cost of gasoline. But, can you deduct gasoline and mileage on your taxes? Here's what you should know.
Yes, you can deduct the cost of gasoline on your taxes. Use the actual expense method to claim the cost of gasoline, taxes, oil and other car-related expenses on your taxes.
No. If you use the actual expense method to claim gasoline on your taxes, you can't also claim mileage. The standard mileage rate lets you deduct a per-cent rate for your mileage. For 2017, you can claim:
You can claim car-related deductions if you're self-employed, a small business owner or a freelancer. Those with a 1099 tax form can easily claim a mileage deduction every year. If you're a W2 employee, you can deduct car-related expenses if you itemize your deductions and it exceeds 2 percent of your Adjusted Gross Income.
It's important to note the limitations of the actual expense method. If you use this to claim costs like gasoline for the first year of your business vehicle, you can only use that method for the life of the car. You can use the standard mileage rate for the first year and then swap between methods in future tax years. A safe way to go is to use the standard mileage rate for the first year your car is in service. From there, you can calculate the value of your vehicle deduction using each method and choose the one that's more valuable.