Actual Car Expenses

• If you own or lease the vehicle you use to provide the taxi service, you are not allowed to take the flat mileage rate deduction on your income tax return. Instead, you can deduct the actual expenses you have paid for your car throughout the tax year. When you take the taxi in for an oil change or to have the tires replaced, keep the receipts from those transactions because you can deduct the expenses when you file your taxes. If you do not own or lease the taxi you use for work, you cannot take advantage of these tax deductions because you don't pay for the expenses.
  
  

Taxi Payments

• If you make lease payments on your taxi, you can deduct these as actual expenses on your income tax return. If you own the vehicle, you can deduct it through depreciation on your tax return instead. You can also deduct license and registration fees for the vehicle and your commercial license fees as well. If the vehicle you use is provided by the taxi company you work for, you cannot take deductions for lease payments or through depreciation because you are not making those payments.
  
  

Gas, Parking and Fees

• Gasoline is another actual cost that you can deduct from your taxes. Save the receipts each time you fill up, then add up the total amounts spent on your tax returns. If you pay garage rent and toll booth and parking fees for your taxi, include these in the actual expense deductions on your income tax return. If your parking, gasoline and garage fees are reimbursed or provided by your employer, however, you cannot claim them as tax deductions.
  
  

Related Deductions

• As an independent contractor driver, you qualify for general business-related expense deductions as well. If you purchase file folders and a filing cabinet to keep your receipts in and business cards to hand out to special customers, you can deduct these as business expenses on your income tax return. Employees of taxi companies are not allowed to take these tax deductions for general business expenses because business supplies are normally supplied by their employer.