I completed some work for an organization. I was paid as an independent contractor and expect to be issued a 1099. For one part of the work, I was required to travel a significant distance (by car). For this expense they offered to reimburse me, at the IRS mileage rate plus tolls. All this is perfectly normal and reasonable. But I have taxation questions.
First I wondered whether this is considered taxable income to me. I looked it up and several questions on SE (like this one) seem to indicate that a travel reimbursement is not taxable income and it will not be reported on the 1099 issued to me.
Here's the question: when I file my taxes and specifically my self-employment taxes, do my out-of-pocket expenses for the trip (gas, tolls, etc.) count as a deductible expense? Can I/should I include this mileage in the miles I drive for business? I'm making up numbers here, but let's say I travel 200 miles and pay $20 in tolls and $30 in gas for this trip.
- 200 miles at $.655 is $131, plus the $20 in tolls, means that the organization will pay me $151 for travel. This is not taxable income as far as I understand.
- The gas probably shouldn't count as a taxable expense because it is reimbursed and included in the mileage.
- If I were to include the 200 miles as business miles on my taxes, wouldn't that unfairly lower my taxable income since I was paid for those miles?