Whether you're a contractor or a subcontractor, if you're self-employed you can write off your job-related transportation costs. The IRS sets the exact per-mile deduction each year. For example, in fiscal year 2018, it was 54.5 cents; for FY 2019, it's 58 cents. You deduct the write-off as a business expense on Schedule C.
Mileage or Expenses?
There are two ways to deduct business costs for your car. One is to figure your actual expenses for the year (gas, maintenance and repairs), calculate the percentage of driving you do for business and deduct that percentage of expenses. Taking the per-mile deduction is simpler. IRS publication 463 gives the details on claiming actual expenses if you go that route.
Publication 463 lists the trips you can deduct as a self-employed subcontractor:
- Driving from your place of business to a job site, for example a plumber driving to a house to make repairs.
- Travel between different jobs, such as an electrician working on two different construction sites.
- Attending meetings away from your place of business.
- Driving to meetings with clients.
- Coming back to your workplace after any of these trips.
Driving from home to your office or a job site isn't usually deductible, unless you work out of a home office.
If your mileage for a trip is deductible, you can also deduct any parking fees you pay. If you have to pay a parking garage while attending a meeting at your client's office, for instance, those fees are deductible. If you pay parking fees when you go to your own office, they're not.
Many taxpayers over the years have tried to justify home-to-office commuting trips (not deductible) or purely recreational trips as business trips and therefore deductible. The IRS has a list of arguments that won't fly:
- You were talking with a client on a cell phone.
- You were talking to a colleague who shared the ride with you.
- You have an advertising display on your personal car (e.g., "McMann, Breckenridge and Holt, attorneys").
- You carry tools or papers needed for work. If you have to pay for a trailer to transport equipment, the trailer costs are deductible, though.
When you drive for business, keep track of where you go and why you went there a meeting, buying supplies, going to a job site, whatever. If your travels are regular, visiting the same locations or customers every month, you don't have to keep track for the whole year. The IRS will want proof that the same pattern shown in your sample is accurate throughout the rest of the year, so you'll want to keep track of places, dates, mileage, receipts and the purpose of each trip.