@peter101611 wrote:
Thanks for your input! I read the link you sent I and I am still wondering if I would be able to use standard mileage method because I have seen some sources say I am not allowed to do that if the car isn't under my name.
Also, I never wrote down my miles at the beginning of the year so am I best off just waiting until next year to start deducting miles?
The IRS really needs to issue some better guidance on this topic.
First, you can only deduct expenses you actually paid.
The actual expense method would require you and your father to determine all car expenses for the year (gas, maintenance, repairs, insurance) and record the total personal and business miles (or, total miles minus business miles equals personal miles.) You can't include expenses you don't pay, such as insurance (unless you give the owner something for their insurance) and you can't include depreciation since only the owner can claim that. Suppose the total vehicle expenses were $3000 and it was driven 20% by you for work. You could deduct whichever is lower, $600 (20% of the total expenses) or what you actually paid for gas and other expenses.
Interestingly, the IRS also says,
Vehicle Provided by Your Employer
If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. You can’t use the standard mileage rate.
The IRS does not discuss how to track the actual expenses of operating the car for business. Presumably by the same method, again not including costs fo insurance or depreciation since the employer is covering those costs.
Regardless of these other rules, I suspect that if you were audited, you would be allowed to deduct gas only, as long as you had some way to prove that you are only deducting gas used by the business. For example, if you filled up the tank every night at the beginning of the shift and again every night at the end of the shift, then the end-of-shift gas might be allowable by the IRS because there is no serious doubt that it is allocable to business use. Possibly, you could take the total miles driven and multiply by the gas mileage of the car, to figure out how many gallons of gas were used for work. (But then you would have the problem that gas prices change during the year. How do you know what you paid.)
There are lots of business expenses the IRS allows without all the complicated paperwork needed for car expenses. What the IRS rules for cars are trying to do is to ensure that non-business costs are not deducted as business expenses (accidentally or on purpose) when the property is mixed use. Possibly if you have some logical way of showing that the gas your buy is only used for rideshare, you would be allowed to deduct it.
As always, your tax return is on the honor system. Less than 1% of returns are audited, but if you are selected for audit, you will lose any deduction you can prove with adequate reliable documentation.
