Commuting Expenses are Not Deductible
The time you spend driving back and forth between your home and your business is considered commuting, and the expenses associated with commuting (standard mileage or actual expenses) are not deductible as a business expense. You cannot deduct commuting expense no matter how far your home is from your place of work. Consider it this way - everyone needs to get to work, employees and business owners alike, so this expense is not part of your business.
The IRS says that commuting expenses are personal expenses. Where you live in relation to your business is at your personal discretion and is travel is not an "ordinary and necessary" expense of business. What if you worked in Los Angeles and commuted from New York? Why should those expenses be part of your business? When you think of it like that, it does make sense.
Use of Car While Commuting
Even if you use your car for business purposes while you are commuting, you cannot deduct the car expenses for your business. For example:
- If you use your personal car to transport materials, supplies, or equipment back and forth from home to office, the IRS says this doesn't make the car expenses deductible.
- If you use commuting time to talk on your cell phone about business matters, the car costs are still not deductible. Of course, you can deduct the charge for the cell phone minutes and any additional charges.
- If you have to pay to park your car at your business location, this expense is most likely not deductible, but check with your tax adviser about special circumstances.
Some commuting expenses may be deductible.
There are always exceptions. In this case, the courts have allowed commuting expense to be deductions in these circumstances:
1. Home Office Exception: Expenses for travel between your home and other work locations are deductible if your residence is your principal place of business.
First you must establish that your home is your principal place of business. This is pretty easy if your home is your only place of business, but if you have other places where you work, you must show that:
- You use it exclusively and regularly for administrative or management activities of your trade or business, AND
- You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.
Then, if you can establish that your home is your principal place of business, you can deduct travel expenses if you work at other locations. For example, a contractor could deduct travel expenses from his home office to a house where he is doing repairs in order to sell the property for a profit.
2. Temporary Distant Worksite Exception - Expenses for travel from your home and a temporary work site outside the metropolitan area where you live and normally work. The reasoning for this exception is that it is not reasonable for a business owner to move permanently to a work site for a job that is only temporary.
3. Regular Work Location Exception - Travel expenses between your home and temporary work locations (regardless of the distance) are deductible if you also have one or more regular work locations away from home.
Source: T.C. Memo 2011-164
Disclaimer. The information in this article an on this GuideSite is intended to be general in nature, and is not intended to be tax or legal advice. Laws and regulations change, and each situation is unique; be sure to check with an attorney before taking deductions or filing business taxes.