Q&A of the Week August 17, 2022

Question

I have a full time job and I also have a side gig. Can I deduct vehicle expenses related to my side gig?

Answer

Generally, yes, vehicle expenses for business are deductible. However, there are rules that must be followed:

1. The amount you can deduct is the same as the percentage of time you use your vehicle for business. For example, if you use your car for business 50% of the time, you can deduct 50% of the expenses.

2. There are two methods for calculating your deduction. You can use the standard mileage rate and add any business-related parking fees and tolls. Or you can deduct actual expenses that may include gas, oil, insurance, repairs, licenses, tires, depreciation, etc., but you must keep receipts, invoices, and documentation. If you are deducting actual expenses, the IRS prefers for this to be kept as a log or something similar.