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.

As fuel costs continue to rise, many people are searching for a way to reduce the cost of driving. Deducting fuel on your annual taxes is one possible way to recoup fuel costs. Although not all fuel expenses are deductible, you can likely claim at least a portion of the costs if you use a vehicle for business-related purposes.

Allowable Fuel Claims

If you use your car only for business purposes, fuel expenses are 100 percent deductible. If you use your car for a combination of business and personal use, you can only deduct the portion of fuel used for business purposes. You may only claim non-reimbursed fuel costs on your tax return. Be sure to exclude any fuel costs that were reimbursed by an employer or client.

Actual Expense Method

The actual expense method allows you to deduct the actual fuel costs for business-related, non-reimbursed fuel expenses throughout the year. In addition to fuel, you may deduct the actual cost of gas, oil, repairs, tires, insurance, registration fees, licenses and depreciation. If you choose this method, keep a log each time that you use a vehicle for business purposes. Include the date, time, mileage and fuel price to easily calculate your deduction at the end of the year.

Standard Mileage Rate

The IRS offers a standard mileage rate as an alternative to deducting actual costs. The rate is published annually and accounts for fuel costs, depreciation, insurance, registration fees and repairs.

Choosing a Method

If you do not wish to keep a detailed log, consider using the standard mileage rate. This rate greatly simplifies tax calculations and is easier to back up in the case of an IRS audit. If you wish to obtain the highest possible deduction, calculate savings using both actual costs and the standard mileage rate at the end of the year, and choose the method that provides you with the greatest possible deduction.


About the Author

Elizabeth Bell is a business professional who has been writing since 2009. Her work appears on websites including eHow and Answerbag. She specializes in content that is focused on business, finance, technology, health and travel. Bell holds a Bachelor of Science in commerce from the University of Virginia.

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