Let’s say you’re driving for Lyft or Uber, and need to grab a coffee before picking up your next customer. The line is longer than expected, you are unable to get to the parking meter to feed in a few more quarters, and you get a parking ticket. Since you drive for a living, the ticket should be deductible on your tax return… right?
Unfortunately for drivers, parking tickets are not deductible. According to the IRS, you cannot get tax deductions for fines or penalties paid to a government (U.S. or foreign, federal or local). This is because the IRS does not want to incentivize citizens to break the law. Also, tickets are not necessary expenses for the production of income (only necessary expenses are tax deductible).
However, there are many things you CAN write off if you drive for a living (or a side-gig!), including the following:
- Standard mileage. From the moment you leave your driveway to start driving in search of your first passenger until you drop off your last passenger and return home, your total business miles are deductible for up to 67 cents in 2024. That’s why it’s important to count every mile so you can save (or earn) more money. Just a side note – if you squeeze in a personal errand or two, those miles won’t count, but you get the picture.
- Actual vehicle costs. If you don’t take the standard mileage deduction, you may be able to deduct the actual costs of using your car for your business. You can deduct your actual expenses like gas, repairs, tires, and oil based on the portion of your business use of your vehicle. This means that you can deduct expenses that you incur while picking up customers, driving them to their destinations, or even any necessary meetings for your company. If you lease your car, you may be able to deduct a portion of the lease payment based on the business use of your vehicle. Be sure to keep records of both business and personal use of the car if it isn’t used 100% for business.
According to the IRS, if your principal place of business is in your home, you can deduct the cost of round-trip transportation between your qualifying home office and your client’s or customer’s location.
If you have no regular office and you don’t have an office in your home, the location of your first business contact of the day is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. While you can’t deduct the costs of these trips, you can deduct the costs of going from one client or customer to another.
While dealing with your business and personal life can be busy sometimes, knowing these simple tips can help you easily find business deductions that will lower your taxes and help you save money for your business. If you still have questions, don’t worry. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
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