With tax season 2018 in full swing, business owners are scrambling to get their records in order to make sure they not only stay compliant, but that they write off everything they are legally able to.
And an area that often causes confusion with self-employed people is that of how to write off the expenses for their vehicle. A lot goes into that topic, such as if the vehicle is used exclusively for business, and if not, how much of it is used for business?
So Can I Expense What I Pay for Gas?
In a word, yes. However, it may not be beneficial for a lot of business owners to do this.
You see, you get to choose between the actual expense method and the standard mileage method. You’ve likely heard of someone tracking their mileage for business. The reason they do this is they get to expense a certain amount of money for each business mile driven.
In 2018, that amount is 54.4 cents a mile driven.
For most business owners, this method is much easier than having to track the actual expenses and then determining afterwards what percentage of their expenses were from business and which were for personal.
So Should I Expense the Money I Spend on Gas?
That question gets to the root of the problem. Should you? Most accountants will argue that using the standard mileage rate is not only easier for record-keeping, it usually will give a bigger deduction for the year because the standard mileage rate is meant to include an average for cost of fuel and depreciation, something that is not easily tracked otherwise.
Your best bet is to speak to a professional, however, and determine together which will be the best route. Depending on how much business driving you do and what type of vehicle you own, one method or the other will likely be significantly more beneficial.
This article is not meant to be tax, legal, or financial advice. For help with your situation, please consult a local professional.