Can you write off tolls for work? Whether or not you can claim this deduction depends on your employment status and the purpose of your travel. The rules for business travel deductions changed with Tax Cuts and Jobs Act, which went into effect in 2018.
Reviewing the rules for claiming tolls and other travel-related expenses will help you avoid filing a tax return with incorrect deductions, leading to hassles and headaches with the IRS you don’t want.
Consider Also: Can I Deduct Toll Road Travel Expenses?
Who Can Claim Deductions?
Before the TCJA, employees could claim deductions for business expenses their employers didn’t reimburse. That deduction is now gone. If you are a contractor, freelancer, sole proprietor, gig worker, have a side hustle or are a small-business owner, you can claim business-related travel expenses.
Consider Also: Tax Deductions for Business Travel Expenses: What You Need to Know
Mileage vs. Actual Expenses
If you qualify to claim business-related travel expenses, you can claim the standard mileage deduction or choose to instead claim actual expenses. Some businesses can use both methods. If you claim the standard mileage deduction, you’ll be able to write off 56 cents per mile for 2021 and 58.5 cents per mile in 2022.
If you take the mileage deduction, it covers your cost to own, operate and maintain your vehicle (such as gas, oil, tires, repairs and lease or loan costs). This doesn’t include tolls, which you can still deduct in addition to your mileage. If you claim actual expenses, you don’t get to deduct mileage, but instead can write off your actual costs to own, operate and maintain your vehicle.
Consider Also: What Is a Schedule C Form: Who Needs to File & How to File
Claiming Toll Expenses
If you pay tolls during qualifying business-related travel, you can deduct those tolls as business expenses on Schedule C of your 1040. This is not true if you depreciate your vehicle, according to eFile.com. You can also deduct parking and ferry fees during qualifying trips, according to the IRS.
Keep your toll slips as proof that you paid these tolls, in the event that you’re ever audited. If you use an electronic pass, write down each trip you take and note the tolls you paid.
Driving to and from a workplace on a regularly scheduled basis is considered a commute, not business travel, even for a contractor. For example, if you’re a personal trainer who drives to clients’ homes and your schedule varies, that’s business-related travel. If you work for a gym or fitness center as a contractor and do all your work at that location, that’s considered a commute.
Work With a Tax Professional
The tax code can change from year to year. Certain provisions in the TCJA will change in 2024, and the law will expire in 2025 or be renewed. Make sure you talk to a tax professional about your employment status, whether or not you can claim tolls as deductible business expenses and how to do it properly.
Steve Milano has written more than 1,000 pieces of personal finance and frugal living articles for dozens of websites, including Motley Fool, Zacks, Bankrate, Quickbooks, SmartyCents, Knew Money, Don't Waste Your Money and Credit Card Ideas, as well as his own websites.