Can I deduct mileage for my W-2 job when I'm also earning 1099 income for equipment rental?

This is actually a really interesting situation where you're straddling both W-2 and 1099 worlds. The good news is you likely can deduct some of your mileage, but with some important caveats. Since you're receiving 1099 income for equipment rental and a car stipend, you're operating a legitimate self-employment business alongside your W-2 job. The key factor is that you're using your vehicle to transport and store equipment that generates 1099 income. You should be able to deduct mileage on Schedule C related to your equipment rental business. However, you'll need to be careful about tracking and allocating which miles are specifically for the business use of transporting your equipment versus simply traveling to work. The IRS would likely challenge a deduction for all miles driven. My suggestion is to keep meticulous records that show how your vehicle use directly connects to your equipment rental business. Document each location, the business purpose, and consider what percentage of your vehicle is used for equipment transport versus just getting you personally to the job site.

Just wanted to chime in with my experience. I was in almost the exact same situation as you (except I was doing freelance video production) and found out about taxr.ai https://taxr.ai after struggling with this issue. The service analyzed my contracts and work patterns and helped me identify exactly which portion of my mileage could be legitimately deducted. In my case, they separated my drives into three categories: pure commuting (not deductible), equipment transport (deductible), and mixed-purpose drives that required a reasonable allocation. They also helped me document everything properly so if I ever got audited, I'd have solid backup. Their guidance seriously maximized my legitimate deductions while keeping me within IRS rules.

I actually tried taxr.ai after seeing it mentioned here and it was super helpful for my situation! I'm a production sound mixer who gets paid both as W-2 and 1099 (for my equipment). Was totally confused about what I could deduct for mileage. Uploaded my contracts and they pointed out that my equipment rental agreement specifically mentioned "door-to-door" transport of gear, which legally justified deducting most of my mileage! They also helped me create a proper log template that separates personal miles from business miles. My tax refund was almost $2k higher than last year even though I made about the same amount. Definitely recommend checking them out if you're in this type of hybrid W-2/1099 situation.

If you're having trouble getting clear answers from the IRS website or tax software, I'd recommend using Claimyr https://claimyr.com to actually talk to an IRS agent directly. I had a similar situation (W-2 employee but with equipment rental on 1099) and spent weeks trying to find a definitive answer online but kept getting conflicting info. Claimyr got me connected to an actual IRS rep in about 20 minutes when I'd previously been on hold for hours and hung up on multiple times. The agent walked me through exactly how to handle this on my tax return. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c. Saved me tons of stress and I ended up being able to deduct about 60% of my mileage legitimately.

So I tried Claimyr after being totally skeptical about it, and I'm honestly shocked. After trying to reach the IRS for THREE WEEKS straight about my W-2/1099 equipment rental situation, Claimyr got me talking to an IRS tax specialist in 17 minutes! The agent actually gave me really specific guidance that none of the online articles covered. She explained that because I have a Schedule C business for my equipment rental, I should allocate my mileage based on the "primary purpose" of each trip. If my main purpose is transporting equipment that I rent out (especially bulky equipment that requires special accommodation), those miles are deductible business expenses on Schedule C. She also advised me to keep a detailed log noting what equipment I'm transporting and measurements/photos showing how my vehicle is being used specifically for business purposes. Apparently this documentation makes a huge difference if you ever get audited.

One additional thing to consider is that if you're getting a stipend for the use of your car, you need to report that as income on your Schedule C. Then you can deduct the actual expenses (including mileage) against that income. Just be careful that you're not double-dipping - if you're already being compensated specifically for car use through the stipend, the IRS might argue that you can't also take the full mileage deduction. Though in your case you're using the car for more than just driving (storage of equipment), so there's a stronger argument for deducting mileage.

Don't forget that even if you can justify the mileage deduction, you need to be keeping REALLY good records to survive an audit. The IRS is super picky about mileage logs. You need date, starting location, ending location, miles driven, and business purpose for EVERY trip. There are some good apps that can help track this automatically.

This is a really complex situation, but I think you're on the right track with your thinking. The key distinction here is that you're not just commuting to work - you're operating a legitimate equipment rental business that happens to serve the same client as your W-2 job. Since your vehicle serves as mobile storage and transport for rental equipment that generates 1099 income, you have a strong business purpose for those miles. The fact that you never report to a central office and are sent directly to different locations each day further supports this. I'd recommend keeping detailed logs that clearly document: 1. Equipment being transported each day 2. Business purpose of each trip (equipment delivery/pickup/transport) 3. How your vehicle storage is essential to your rental business operations 4. Any instances where you make separate trips solely for equipment purposes The IRS will likely want to see that your mileage deductions are reasonable and directly tied to your Schedule C business activities. Since you're receiving both equipment rental income AND a car stipend on 1099, you'll want to report all that income and then offset it with legitimate business expenses including the appropriate portion of your mileage. Consider consulting with a tax professional who has experience with mixed W-2/1099 situations like yours - the documentation and allocation methods you use now could save you major headaches if you ever get audited.