Let’s say you’re driving for Lyft or Uber, and need to grab a coffee before picking up your next customer. The line is longer than expected, you are unable to get to the parking meter to feed in a few more quarters, and you get a parking ticket. Since you drive for a living, the ticket should be deductible on your tax return… right?
Unfortunately for drivers, parking tickets are not deductible. According to the IRS, you cannot get tax deductions for fines or penalties paid to a government (U.S. or foreign, federal or local). This is because the IRS does not want to incentivize citizens to break the law, and also, tickets are not necessary expenses for the production of income (only necessary expenses are tax deductible).
However, there are many things you CAN write off if you drive for a living (or a side-gig!), including the following:
- Standard mileage. From the moment you leave your driveway to start driving in search of your first passenger, until you drop off your last passenger and return home, your total business miles are deductible for up to 65.5 cents per mile in 2023. That’s why it’s important to count every mile so you can save (or earn) more money. Now, obviously if you squeezed in a personal errand or two, those miles don’t count, but you get the picture.
- Actual vehicle costs. If you don’t take the standard mileage deduction you may be able to deduct the actual costs of using your car for your business. You can deduct your actual expenses like gas, repairs, tires, and oil based on the portion of your business use of your vehicle. This means that you can deduct expenses that you incur while picking up customers, driving them to their destinations, or even any necessary meetings for your company. If you lease your car, you may be able to deduct a portion of the lease payment based on the business use of your vehicle.
While dealing with your business and personal life can be busy sometimes, knowing these simple tips can help you easily find business deductions that will lower your taxes and help you save money for your business. If you still have questions, you can connect live via one-way-video to a TurboTax Live Self-Employed tax expert with an average of 12 years experience, to get your tax questions answered. TurboTax Live Self-Employed tax experts are available in English and Spanish, year-round, and can even review, sign and file your tax return.