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Old 04-14-2017, 12:34 PM
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Indepent contractor receives gas reimbursement, can I still deduct my mileage?

I am an independent contractor. The payment I receive from the company I'm contracted with is a specified amount per case completed, an hourly amount for drive time, and gas is reimbursed. Since gas is reimbursed, can I still deduct my mileage? (approx. 600 miles per week)



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Old 04-15-2017, 10:25 PM
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No; you cannot deduct both miles and gasoline on your taxes. You must choose either mileage or the actual expense method of deduction. Choosing both will likely result in an audit. The IRS will disallow one of the deductions. You will have to pay the tax you owe, which would be under-reported due to taking an illegal deduction. You'll then be assessed a penalty and interest on your underpaid amountas long as the vehicle is used for business purposes, you may deduct the cost of the actual gasoline used or you may deduct mileage you put on the vehicle. you must choose either one of them not both at the same time;Deducting the actual cost of the gasoline you use is called the "actual expense" method of deduction. Using this method, you deduct the actual cost of the gasoline you use for business purposes only. You also can deduct maintenance expenses, such as routine oil changes. If you use the vehicle for both business and personal use, you must calculate the percent of time the vehicle is used for business and deduct only that percent of gasoline from your taxes. For example, if you drive 1000 miles in total for the year, but 200 of those miles are personal-use miles, then you can only deduct 80% of the cost of the gasoline; you also may deduct mileage of the vehicle. Any miles you drive in connection with business activity are deductible. The IRS publishes a deduction rate each year. You must keep a log book of the miles you drive. Then, add up all miles you drive for business use. Do not count any personal miles you drive. Multiply the amount of miles you drove for business use by the deduction rate published by the IRS, which is 55.5 cents per mile, depending on each year . This is the total dollar amount you may deduct from your taxes.



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