You can take a tax deduction for business related vehicle expense on your Schedule C. If you have a car designated entirely for business use, you can deduct its full operating cost. If your personal vehicle is used in part for business purposes, however, you’ll need to divide your expenses to deduct only the business usage costs. There are two options for calculating the business use of your vehicle:
- Standard mileage rate
- Actual expense method (eligible expenses include depreciation, lease payments, registration fees, licenses, gas, insurance, repairs, oil, and tires)
Note: Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expenses.
It’s important to track your mileage. If you’re audited, you may need to show a log of the miles you drove. For any expenses split between personal and business use, be sure to deduct only the business portion from the total cost. Always keep records of your expenses in case the IRS asks to see documentation.
Where do I enter my Self-Employment expenses (including vehicle expenses)
Business Use of Vehicles
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