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Car and Mileage Deduction for Freelancers
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Car and Mileage Tax Deduction
As a self-employed individual, freelancer, gig worker, independent contractor, you can claim deductions that can substantially lower your 1099 tax. If you own a car and use it for business purposes, you can deduct mileage and car-related expenses. For many self-employed individuals, mileage is the largest deductible on their tax returns.
Moreover, the deduction is not just limited to Uber, DoorDash, or rideshare drivers. If you work primarily from a home office, the occasional supply run, client meeting, or business trip also counts. You also don’t have to drive year-round. If you happen to drive for work only during the summer, you can write off car and driving related expenses during those months.
The IRS does not consider commuting as a business mileage expense, so driving from your home to your workplace does not count. However, running a business errand is considered a valid expense.
There are two methods to claim the mileage tax deduction:
- Standard Mileage Method: You can multiply your business miles driven by the standard rate (65.5 cents in 2023). This amount includes driving costs, gas, repairs/maintenance, and depreciation.
- Actual Expenses Method: You can track the actual costs of operating your car. Qualified expenses with this method e include gasoline, oil, tires, repairs, insurance, tolls, parking, garage fees, registration fees, lease payments, and depreciation licenses.
It can get tricky to determine which method will work best for maximizing your savings when paying self-employment taxes. For a vehicle you own or lease, you can deduct either the actual expenses or the standard rate per mile driven.
Freelancers claiming this deduction
Direct Sellers
As a direct seller, you can write off your miles to the bank to deposit your checks, to the post office to send thank-you letters or when you drive to purchase office supplies, or anything else related to your business.
Uber/Lyft Drivers
If you're an Uber driver and routinely drive to pick up and drop off passengers, then all the car-related expenses such as gas, oil changes, car washes, and tires will be deductible.
Delivery Drivers
Delivery drivers can deduct the miles they drive making deliveries, picking up supplies, and running business-related errands. You can either use the standard mileage rate to take a deduction of 65.5 cents per business mile, or you can use the actual expense method to deduct the business portion of costs like gas, repairs and maintenance, auto insurance, registration, and car loan interest or lease payments.
Artists
If you’re an artist, you can claim a portion of your car expenses if you use your vehicle for your art business. Especially if you use your car or truck to transport your work to shows or fairs or to pick up materials — you can claim these through the mileage deduction or as a percentage of your personal vehicle use.
Bakers
As a baker or chef, you can deduct your mileage or car expenses if you drive for your business. This can involve picking up baking supplies, delivering baked goods, attending events, and more.
Social Media Influencers
As a social media influencer, you may have to travel to different locations for a photo shoot or an event campaign. Here, you can claim a portion of your car expenses if you use your vehicle for business-related purposes.
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