In some cases, the gas you use in your automobile may be tax deductible.
As tax time approaches, you may be organizing your documents and looking for ways to minimize the amount you owe or increase the size of your refund check. One of the most common business expenses that Americans wish to write off as a tax deduction is a percentage of the cost of gas for the tax year. However, there are fairly strict rules and qualifications to consider to avoid complications on your tax return.
Business versus Personal
You may write off your entire gas expense for the tax year only if the car you are using is solely driven for business purposes. However most people use their auto for a mix of business and personal obligations. In this case, you must be able to decipher an accurate percentage for business use and deduct only this amount of your gas expense.
Commuting
It is a common belief that you can write off the cost of gas whenever you are driving the car for work purposes. However, your standard commute does not count, and this gas is not deductible. Driving from your place of work to another place of work, or trips taken to run business errands do qualify. Gas expenses accrued when driving to a convention, job interview, or outside of the office meeting or event may also be deducted.
Mileage Rate or Expense Method
If you own or lease the car, you may use the standard mileage rate to calculate your deduction, based of course on only the miles driven for business, excluding the standard commute. You may also use the actual expense method in which you determine the actual cost of gas spent for business purposes for the year. If you qualify for either method, you may want to calculate both and see which one benefits you more.
Documentation and Evidence of Business Use
The IRS is strict about providing evidence of all write-offs, even the ones that may be difficult to keep track of, including gas expenses. Keep a collection of receipts from gas purchases throughout the year and record trips that qualify as business use of the car. The more detailed documentation you can provide to justify your deduction, the less likely the chance of having to re-file.
Tags: business purposes, driven business, place work, purposes However, standard commute, your deduction