You can write off gasoline costs for your vehicle as long as you use it for business purposes at least some of the time. The Internal Revenue Service allows you to take the credit in two ways, as long as you have been maintaining pertinent record-keeping. One option is to deduct actual expenses, the other is to use a standard mileage rate.
Business and Work-Related
If you run a business or are self-employed, the IRS allows you to deduct the cost of gas for business purposes. If you are an employee, you are eligible to claim a tax deduction for any unreimbursed expenses for work-related use of your car. It is good practice to keep a record of your gas receipts so that you may deduct the cost of the actual gas used. Alternatively, tracking your odometer readings can help you deduct an amount based on mileage.
Claiming Actual Expenses
If you use the actual expense method of deduction, you'll need to gather all receipts for your gas. This total will be added to your other auto expenses including depreciation, insurance, registration fees, licenses, lease payments, maintenance, repairs, tires, parking fees and tolls. If your vehicle is for both business and personal use, determine the percentage of time you use the vehicle for business to calculate the appropriate gas deduction. If you are an employee, you can take the deduction if all expenses exceed 2 percent of your adjusted gross income. To take the employee deduction, you must itemize deductions on your tax return.
Standard Mileage Deduction
You can opt for the IRS's standard rate for each mile you drive, usually updated on the agency's website each October. If you have been keeping a log of the miles you drive for business or work-related activities, you'll add them up and multiply by the deduction rate. You then deduct the total dollar amount from your taxes. This simplifies the deduction, because you do not have to worry about the extraneous stuff common with the actual expenses method. Your gas expenses will be taken care of by the mileage deduction.
If you're an employee, the amount you pay for gas for your work-related use of vehicle is considered an unreimbursed business expense, and you should report it on IRS Form 2106. The costs are then lumped together with your other deductions, giving the miscellaneous expenses on Schedule A. If you're self-employed or a small-business owner, you'll take the deduction for business use of your vehicle on Schedule C. If you're a farmer, you'll use schedule F.
- Stockbyte/Stockbyte/Getty Images