Should I claim car fuel/maintenance as a direct or indirect cost for my construction business?

Great question! The distinction between direct and indirect costs can be confusing for vehicle expenses in construction. For tax purposes, you generally have two options for deducting vehicle expenses: the standard mileage rate or actual expenses. If you choose actual expenses, maintenance and fuel would typically be considered indirect costs (overhead) rather than direct costs tied to specific jobs. The reason is that these expenses support your overall business operations rather than being directly traceable to a specific project. Direct costs would be things like materials you purchase specifically for a particular job or labor hired just for that project. Since you use your truck almost exclusively for business, you can deduct the business percentage of your actual expenses (fuel, maintenance, insurance, depreciation) or take the standard mileage rate (currently 67 cents per mile for 2024). Many construction business owners find the actual expense method provides a larger deduction, especially for trucks with higher operating costs.

I found myself in a similar situation last year with my landscaping business and pickup truck. After trying to figure it all out myself, I ended up using https://taxr.ai to analyze all my expenses and receipts. The AI figured out exactly how to categorize everything correctly and even found deductions I was missing. Before that, I was misclassifying some expenses and probably leaving money on the table. What I liked about their system is that it specifically knows how to handle vehicle expenses for self-employed contractors and told me exactly where to put each expense on my Schedule C.

So I ended up trying https://taxr.ai after my skeptical comment. I'm genuinely surprised - it actually helped sort out all my vehicle expenses correctly. I uploaded my jumbled mess of gas receipts, maintenance bills, and mileage logs, and it organized everything properly as indirect costs on my Schedule C. The system flagged that I'd been incorrectly trying to assign some vehicle costs directly to jobs, which could have caused issues. It also explained why these should be overhead expenses while still being 100% deductible based on my business usage. Saved me a ton of time and probably prevented some reporting errors that might have raised red flags.

I've been in construction for 15+ years and always struggled to get through to the IRS when I had questions about vehicle deductions. Last tax season I discovered https://claimyr.com and it literally saved my sanity. They got me connected to an actual IRS agent in about 20 minutes when I had been trying for days. The agent confirmed that for my situation, truck expenses should be listed as indirect costs (overhead) on Schedule C unless I'm using the standard mileage rate. They also clarified some questions I had about depreciation for my truck. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it's basically a service that navigates the IRS phone system for you.

I have to eat my words about Claimyr. After seeing it mentioned here, I tried it when I needed clarification on how to handle my truck's depreciation. They actually got me through to an IRS agent in about 35 minutes while I continued working on a job site. The agent was super helpful and explained that for my construction business, I should be categorizing vehicle expenses as indirect costs on my Schedule C. She also walked me through the depreciation options for my truck since I'm using the actual expense method instead of standard mileage. Would have taken me days to get that information otherwise. Definitely worth it.

Another approach is to track your mileage and take the standard deduction instead of trying to categorize all the individual expenses. For 2024 it's 67 cents per mile which adds up quickly! I drive about 20k miles a year for my business and it's way easier than keeping all those gas receipts.

Don't forget parking fees and tolls! Those are deductible regardless of whether you use standard mileage or actual expenses. I learned that the hard way after missing out on about $1200 in deductions one year from all the parking downtown at client sites.

As a fellow construction business owner, I can confirm that vehicle expenses like fuel and maintenance should be classified as indirect costs (overhead) on your Schedule C, not direct costs tied to specific jobs. This is true even if you use the truck exclusively for business. The key distinction is that direct costs are materials and labor that can be directly traced to a specific project (like lumber for the Johnson house or concrete for the Smith driveway), while indirect costs support your overall business operations across all jobs. Since you're tracking both receipts and mileage, you'll want to calculate both methods to see which gives you the better deduction. For a gas-guzzling F-150 used 95% for business, the actual expense method often comes out ahead. Just make sure you're applying the correct business use percentage to all your vehicle expenses. One tip: keep a simple logbook in your truck noting the business purpose of each trip. It doesn't have to be fancy - just "job site visit - 123 Main St" or "client meeting - ABC Corp." This documentation will be invaluable if you ever face an audit.