In this Ask a Tax Expert, our tax pro answers how to deduct tolls on your taxes. Remember, you can deduct nearly any toll as long as it’s related to business. But, what if your tolls are related to charity?
Can I deduct toll expenses on taxes?
Q. My wife volunteers for a hospice care organization. She travels there daily and pays a lot of tolls to get to some of her patients. Most of our monthly toll bill is for her volunteer work. Would we be able to deduct those from our taxes?
A. You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses that are directly related to the use of your car in giving services to a charitable organization. Thus, you and your wife may deduct the cost of highway or bridge (or other) tolls she pays to volunteer at a hospice. Parking is deductible as well.
You may also deduct the cost of driving to the hospice or to visit patients in their homes. Such mileage may be deducted in one of two ways: You can deduct your actual expenses, which primarily consist of gas and oil. You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance.
Actual expense method vs standard mileage rate
Instead of deducting your actual expenses, you can use the standard charitable mileage rate of 14 cents a mile. The 14 cents per mile rate is very low—it hasn’t been adjusted in many years.
In contrast, the standard mileage rate for business-related driving is 58 cents per mile in 2019. Thus, you’ll certainly get a larger deduction if you use the actual expense method. The tax reform bills pending in Congress enable the IRS to increase the charity mileage rate; but, assuming tax reform becomes law, this won’t happen until 2018 at the earliest.
Whether you use the actual expense method or standard mileage rate, you must document your miles. This includes the date, place, and purpose of each trip and the mileage driven.
If you use the actual expense method, you also need to have receipts or other documentation for gas and oil purchased. The easiest way to do this is to keep track of what you spend on gas all year and deduct the percentage of driving you do for charity.
Our resident small business tax expert, Stephen Fishman, answers your tax questions. Have a tax question for Stephen? Submit it here.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.