Deductions may be on your mind if you're preparing to get your 2021 taxes finished and filed. Can you write off gas on taxes while filing returns? And can you write off mileage on taxes?
The simple answer is: it depends. It comes down to why and where you're driving as part of your work. Take a look at what you need to know about taking advantage of gas tax deductions.
Is Gas Tax Deductible if You Are a Commuter?
Can you deduct gas on taxes if you are a commuter? Unfortunately, you cannot write off gas costs if you're an "ordinary" commuter. This means that the deduction is not available to you if you're one of the millions of Americans driving to their jobs daily. The length of your commute doesn't play a role in your eligibility.
How to Write Off Gas on Taxes
Gas becomes a deductible expense only when you drive from the place where you conduct business to a different location that isn't your home. What does that look like in a real-world scenario? Imagine that you're going from the office to a client site.
The cost of the gas that you use to get there would be considered a deductible expense. That's because that travel time is considered to be outside of your "normal commuting time." However, the only caveat for getting a gas tax write off is that you can only deduct this expense if you are self-employed.
Gas Tax Deductions on 2021 Taxes
When deducting gas costs, you're not actually deducting the dollar amount that you paid for gas. What you're actually doing is taking a deduction based on the mileage you've driven for business purposes using your vehicle. The IRS usually releases standard mileage rates for each year sometime in December.
When doing your 2021 taxes in 2022, you'll need to use the 2021 standard mileage rates that went into effect on Jan. 1, 2021. Here's how much the IRS will permit you to deduct:
- 56 cents per mile driven for business use (down from 2020).
- 16 cents per mile driven for medical or moving purposes (down from 2020).
- 14 cents per mile driven in service of charitable organizations (unchanged from 2020).
More on Deducting Gas
These rates apply for all cars, vans, pickups and panel trucks. The IRS determines these rates using the findings of an annual study of the fixed and variable costs of operating an automobile in the United States.
If taxpayers prefer, there is the option to calculate the actual cost of using your vehicle for specific business purposes instead of taking the IRS's standard mileage rates. However, you can only do this with a car that you own or lease. It's also important to know that the standard mileage rate can only be used for no more than five vehicles simultaneously.
Claiming the Standard Mileage Deduction
It's necessary to maintain impeccable records of all business-related driving if you intend to write off driving expenses on your taxes.
Ideally, this is something that you'll be building up to all year by saving the gas receipts for taxes, instead of trying to cobble together a list of deductible driving expenses at tax time. Here's a rundown of the log to keep for each driving session that you intend to write off:
- The date of your trip
- Starting point and destination
- The reason for the trip
- Odometer readings at the beginning and end of your trip
- Round-trip mileage for the trip
Don't forget that the costs associated with both tolls and parking can be tax-deductible. That applies whether you take the standard mileage deduction or do your own calculations. Of course, you must be able to provide records for any expenses you claim for tolls and parking.
Final Thoughts on Deducting Gas Costs
The 2021 IRS standard mileage deduction will almost certainly only apply to you if you're filing as a self-employed taxpayer. In all cases, keeping impeccable records of how far you travel is essential!
Read More: About the Schedule SE for Self-Employment Taxes
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.