Freelancers and other individuals who travel for business reasons can deduct their actual car expenses. Their deductible items include gas, oil, tires, repairs, license tags, registration fees, insurance, garage rent, lease payments, parking fees, tolls, and depreciation.
As an alternative to writing off actual expenses, they may be able to claim a standard mileage rate that’s adjusted annually to reflect inflation. While gas is a major factor in the optional figure, the IRS also considers other items, such as insurance and the price of new vehicles. (Just to be clear, the agency defines “cars” to include vans, pickup trucks, and panel trucks.)
The advantage of the optional rate is that it eliminates the extra burden of tracking actual costs; records need to be kept only of business miles driven for the year in question. The standard rate is 53.5 cents per mile for 2017, down from 54 cents for 2016.
The mileage rate is a benchmark used by federal and state governments and many employers to reimburse employees for their mileage. Employees can deduct actual expenses that exceed reimbursements.
Besides claiming actual expenses or the mileage allowance, remember to take a separate deduction for parking fees, as well as bridge, tunnel, and turnpike tolls that you pay while on business.
A business-driving example: For 2016, Doris drives 10,000 miles and pays $200 for parking and tolls. Her allowable deduction is $5,600 ($5,400 [10,000 x 54], plus $200).