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If you’re a Lyft driver, you might be wondering if car maintenance is a business expense you can deduct on your taxes. The answer is: it depends. The IRS has specific rules regarding what qualifies as a business expense, and car maintenance falls into a gray area. This article will break down the rules and help you determine if your car maintenance costs are deductible for Lyft drivers.

What Qualifies as a Business Expense for Lyft Drivers?

The IRS defines a business expense as a cost incurred in the process of generating income. For Lyft drivers, this means expenses directly related to driving for Lyft, such as:

• Gas: This is a straightforward business expense, as you wouldn’t be driving for Lyft without using gas.
• Tolls: If you encounter tolls while driving for Lyft, those are also considered business expenses.
• Insurance: Your car insurance is deductible, as long as it includes coverage for driving for hire services.
• Car Depreciation: You can deduct a portion of your car’s value each year as it depreciates.

How Does Car Maintenance Fit In?

The question of whether car maintenance is a business expense for Lyft drivers often comes down to how you use your car. If you only use your car for Lyft driving, you can generally deduct most of the maintenance expenses, including:

• Oil Changes: A regular oil change is essential for maintaining your car, and since you’re using it for Lyft, it can be considered a business expense.
• Tire Rotations: Tire rotations are crucial for safety and proper tire wear, and they are deductible.
• Brake Repairs: If your brakes need repairs due to wear and tear from driving for Lyft, those costs are deductible.
• Engine Repairs: If your engine needs repairs due to wear and tear from driving for Lyft, those costs are deductible.

What if You Use Your Car for Personal and Business Use?

If you use your car for both personal and Lyft driving, you’ll need to track your mileage to determine which portion of your maintenance expenses are deductible.

Here’s where it gets tricky:

• IRS Standard Mileage Deduction: You can deduct a standard amount per mile for business use, but this includes both gas and maintenance costs. This method is often easier than tracking individual expenses, but it can result in a smaller deduction than tracking actual expenses.
• Actual Expense Method: You can track your car’s maintenance costs, as well as mileage for both business and personal use, and deduct the percentage that is related to your business driving. This method can result in a larger deduction, but it requires meticulous record keeping.

How to Track Your Mileage

• Mileage Tracking Apps: Apps like Hurdlr, Stride, and MileIQ automatically track your mileage, making it easier to separate business and personal driving.
• Logbook: You can manually track your mileage in a notebook or spreadsheet. Be sure to record the date, starting and ending mileage, purpose of the trip, and whether it was for business or personal use.
• IRS Form 4562: You’ll need to use this form to report your depreciation and any other expenses related to your car.

Expert Insights:

“Tracking your mileage is absolutely crucial if you’re using your car for both personal and business use,” says David Thompson, Certified Public Accountant specializing in taxes for gig workers. “Without accurate records, you can’t accurately determine how much of your car maintenance costs are deductible.”

Sarah Miller, a seasoned Lyft driver, echoes this sentiment: “I use a mileage tracking app to keep track of my driving. It makes it so much easier at tax time. I also make sure to keep all of my receipts for car maintenance.”

What About Unexpected Repairs?

Unexpected repairs can be a major headache, especially if you’re not sure if they are deductible. If the repair is directly related to your driving for Lyft, such as a flat tire caused by driving on rough roads, you’ll likely be able to deduct the cost. However, if the repair is unrelated to your driving, such as a cracked windshield from a rock thrown by another car, it’s less likely to be deductible.

Key Takeaways

• Car maintenance can be a deductible business expense for Lyft drivers, but it depends on how you use your car.
• Keep detailed records of your mileage and maintenance costs.
• If you use your car for both personal and business purposes, consider using the actual expense method or the standard mileage deduction.
• Consult with a tax professional to determine what expenses you can deduct.

FAQ

Q: Can I deduct the cost of car washes if I drive for Lyft?

A: Car washes are generally not considered deductible business expenses, unless you are using them to maintain your car’s cleanliness for professional purposes, such as advertising your business on your car.

Q: Can I deduct the cost of a new car if I buy one for Lyft driving?

A: You can’t deduct the full cost of a new car, but you can depreciate its value over time.

Q: Do I need to keep receipts for all of my car maintenance?

A: Yes, it’s a good idea to keep all of your receipts in case you are audited by the IRS.

Q: Can I deduct the cost of parking for Lyft driving?

A: Yes, parking fees incurred while waiting for rides or dropping off passengers are deductible.

Q: What if I’m using my car for another ride-sharing service, like Uber, in addition to Lyft?

A: You can still deduct the cost of car maintenance, but you’ll need to track your mileage for each service separately.

If you’re still unsure about whether your car maintenance costs are deductible, it’s best to consult with a tax professional.