Are you a self-employed individual who occasionally employs your vehicle for business? If that’s the case, car expenses such as auto insurance, maintenance, and yes, gasoline, maybe a significant source of tax savings for you.
If you use your car for business, you may deduct the gas used as long as you pick the actual cost method for claiming the business usage of your automobile. Let’s have a look at how it works!
Can I Write-Off Gas for work?
The answer is maybe. If you use your car for business, you may deduct the gas used as long as you pick the actual cost method for claiming the business usage of your automobile. Let’s have a look at how it works!
When it comes to gas, there are two methods that taxpayers can use to calculate their deduction: the standard mileage rate or the actual expenses method.
The standard mileage rate is a set amount that the IRS determines each year and is based on an average of what it costs to operate a vehicle. For 2020, the standard mileage rate for business use is 57.5 cents per mile driven.
Under the actual expenses method, taxpayers can deduct the actual cost of gas and oil used, as well as depreciation, lease payments, insurance, repairs, and tires.
To use the actual expenses method, taxpayers must keep receipts or other documentation to prove the costs incurred.
Which method is right for you will depend on how much you drive for business and the type of vehicle you use.
If you have a high mileage vehicle, you may get a larger deduction by using the actual expenses method.
Similarly, if you have a low mileage vehicle, the standard mileage rate may give you a larger deduction.
Claiming Gas on Taxes 2020
If you want to claim gas on your 2020 taxes, you’ll need to know which of the two methods – standard mileage rate or actual expenses method – will work better for you. The answer will depend on how much you drive for business and the type of vehicle you use.
Tax professionals such as The Oasis Firm can help you evaluate your options and maximize your deductions. Schedule a free consultation today to get started!