Am I Allowed to Claim Fuel on My Taxes?

Non-reimbursed business-related fuel expenses can be claimed as a deduction on your personal tax return.

Non-reimbursed business-related fuel expenses can be claimed as a deduction on your personal tax return.

You spend a lot of time in your car on business. Fortunately, if your company doesn’t reimburse you for that mileage, a tax deduction is available on your federal tax return.

Deducting Mileage for Work

You can decide whether to use the IRS’ standard mileage rate for your own car or use the actual expenses method, which includes claiming petrol on your tax return, along with oil, insurance, tires, repairs, registration, licenses and other costs as a percentage of all business-related miles. If your car is used only for business purposes, you can deduct 100 percent of your expenses.

Standard Rate Versus Actual Expenses

The IRS requires that taxpayers use the standard mileage rate when an owned vehicle is used for the first time as a business vehicle. After that initial year, you can either use the standard mileage rate or go the actual expenses route. If you lease the vehicle, you must use the standard mileage rate for the entire length of the lease, including renewals. If using the actual expenses method on your tax return, gas receipts are needed for proof of your costs in case of an audit. However, if you use any depreciation method for your vehicle under the Modified Accelerated Cost Recovery System, you cannot claim a standard mileage rate. The same holds true if you use a Section 179 deduction for the vehicle. You can still use the actual expenses method and include depreciation of the vehicle in your calculations.

If you use the actual expenses method, you must keep careful records, including the price of fuel. Using the standard deduction method does not require as much recordkeeping, and it is easier to determine your costs. If you aren’t sure which method works best for your situation, calculate costs based on both methods and see where you get the larger deduction.

2018 Standard Deductible Tax Mileage Rates

For 2018, the IRS’ standard mileage rate is slightly higher than in previous years. For business travel, it is 54.5 cents per mile. For moving or medical purposes, it is 18 cents per mile, and if driving in the service of nonprofit charitable organizations, it is 14 cents per mile.

2017 Standard Deductible Tax Mileage Rates

For 2017, the IRS standard tax deductible rates for mileage for the use of your vehicle is 53.5 cents per mile when driven for business purposes, 17 cents per mile when driven for either medical or moving purposes and 14 cents per mile when driven while volunteering for charitable organizations.

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A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.

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