You can use a recent Tax Court case ruling to help protect you against the Internal Revenue Service questioning your vehicle expenses. Gonzalez, TC Summary Opinion 2022-13, 7/18/22 ruled that you can deduct vehicle expenses related to a side-gig, as long as you follow strict rules.
Generally, expenses relating to use of a car, van, pickup, etc. used for business are deductible. If you drive your own passenger car to visit clients or customers, you may write off the portion of your vehicle’s costs that is attributable to business use, subject to some special limits. If you use your car 80% for business, you can deduct 80% of the costs.
There are two allowable methods to compute the expense.
The actual expense method may provide a bigger deduction than the standard mileage rate; but there is more paperwork. You must keep receipts, invoices and other documentation to show costs and establish the identity of the vehicle for which the expenses were incurred. For depreciation purposes, you must document the original cost of the vehicle and any improvements, as well as the date it was placed in service.
BEST PRACTICE - The best way to secure a deduction is to keep a contemporaneous log or comparable record of expenses and business use. This includes the date, business purpose and number of number of miles driven.BACK TO LIST