IRS Standard Mileage vs Actual Expenses
Deducting Vehicle Costs
If you use your personal car for freelance business (e.g., driving to a client meeting, a photo shoot, or dropping off inventory), the IRS allows you to deduct those costs. You can choose between two methods: The Standard Mileage Rate (deducting a fixed cent amount per mile) or the Actual Expenses method (adding up gas, repairs, and depreciation and deducting the business percentage of the total).
Frequently Asked Questions
Does driving from home to a co-working space count?
It depends on whether your home is your principal place of business. Ordinary commuting — home to a regular workplace and back — is never deductible. But if you qualify for the home office deduction because your home is where you do your substantive work, trips from there to a client, a co-working space or any other business location are business miles from the moment you leave. That exception applies to a lot of freelancers, so do not assume the first drive of the day is automatically a commute. If you have no qualifying home office and work regularly from the same co-working space, driving there is commuting.
Can I switch between the two methods?
If you want the option, take the standard mileage rate in the first year you use that car for business. You can switch to actual expenses in a later year. Go the other way — actual expenses first — and that vehicle is locked out of the standard rate for good. One extra rule for leases: whichever method you pick must be used for the entire lease period, renewals included.
What records do I have to keep?
Enough to show the business purpose of each trip: the date, the mileage, where you went and why. A contemporaneous log — an app, or a notebook in the glovebox — is far stronger than a reconstruction made at filing time. The standard mileage rate simplifies the arithmetic, not the record-keeping.