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Category: Finding Deductions

Unreimbursed Employee Expenses - Vehicle Expenses

There are 2 methods for computing vehicle expenses: the standard mileage rate and the actual expense method. You cannot use the standard mileage rate and claim actual expenses. You must choose one or the other if you qualify for both.

Standard Mileage Rate: The standard mileage rate is a general, per-mile rate that the IRS allows to calculate your deduction. In figuring this amount, the IRS takes into consideration all the costs of operating a vehicle, such as: gas, oil, repairs, insurance, tires, etc. You can use the standard mileage rate only if:

  • you owned the vehicle and used the standard mileage rate for the first year you placed the vehicle in service, or
  • you leased the vehicle and are using the standard mileage rate for the entire lease period.

You cannot use actual expenses for a leased vehicle if you previously used the standard mileage rate for that vehicle.

Actual Expenses: You can deduct as actual expenses any of the following:

  • Gasoline
  • Oil
  • Repairs
  • Insurance
  • Tires
  • License plates
  • Lease or rental payments if you leased or rented a vehicle instead of using your own vehicle.
  • Depreciation
  • Tolls
  • Garage rent
  • Parking fees
  • Registration fees

DO NOT INCLUDE state and local personal property taxes or interest expense you paid on Form 2106. Only the personal property taxes may be eligible for deduction. If so, these should be deducted in the "Taxes You Paid" section of your itemized deductions.

If you did have any qualifying unreimbursed employee vehicle expenses during the tax year, you can enter these under: Federal Section > Deductions > Enter Myself > Itemized Deductions > Job Related Travel Expenses (Form 2106)

For further information on vehicle expenses click here

To view mileage rates click here