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TaxLary1
New Member

Self-employed. Mileage deduction vs gas reimbursement

I am self-employed. My client reimburses my gas for business purposes.  However my deduction for mileage with the IRS would be higher than the gas my client pays me; can I reduce the IRS mileage deduction with the amount of money I receive for gas?

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Accepted Solutions
DanPaul02
Level 7

Self-employed. Mileage deduction vs gas reimbursement

You can deduct mileage and claim the money your client gives you for gas as other income.  Because your client is giving you money for gasoline does not mean that you cannot claim the mileage deduction  instead of actual expenses on your vehicle.

Don't attempt to reduce the mileage deduction.  Make the reimbursement a separate income entry.  

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4 Replies
DanPaul02
Level 7

Self-employed. Mileage deduction vs gas reimbursement

You can deduct mileage and claim the money your client gives you for gas as other income.  Because your client is giving you money for gasoline does not mean that you cannot claim the mileage deduction  instead of actual expenses on your vehicle.

Don't attempt to reduce the mileage deduction.  Make the reimbursement a separate income entry.  

Opus 17
Level 15

Self-employed. Mileage deduction vs gas reimbursement

"can I reduce the IRS mileage deduction with the amount of money I receive for gas?"

 

Yes.  I believe Turbotax asks about non-taxable reimbursements.

 

It is also acceptable to deduct the full mileage amount and report the reimbursements as taxable income.  The outcome (net taxable income) will be the same, although one method will show higher pre-tax gross income than the other. 

 

Also, this assumes your client uses an accountable plan and only reimburses you for expenses you prove with receipts.  If your client pays you a mileage allowance and does not require proof of mileage driven or gas expenses, this is a non-accountable plan, in which case the client must include the full reimbursement as taxable compensation on your 1099-NEC, and you would deduct the full mileage rate without additional adjustments. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
TaxLary1
New Member

Self-employed. Mileage deduction vs gas reimbursement

Thank you so much for your help much appreciated!

TaxLary1
New Member

Self-employed. Mileage deduction vs gas reimbursement

Thank you very much for your help!

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