Deducting Business Mileage to and From a Home Business

If you operate your business from your home, you can deduct business-related car expenses for travel back and forth from home to business locations for business purposes. These expenses include all of the costs of running your car, provided you can meet Internal Revenue Service (IRS) requirements.

Business Mileage Deductions

Commuting expenses are generally not deductible because they are considered personal expenses. But driving from your home business to a client location or for business errands is not considered commuting, as long as you can meet the principal-place-of-business qualification.

Also, your mileage to work sites and back are business miles that must be supported by written documentation of where you went and how many business miles you traveled. Trips to the bank and post office for business matters also qualify as business mileage if documented. Trips for personal errands do not qualify.

The result of your records should be business miles for the year (with backup written or digital records) and total miles that were driven for the year. To document your total miles driven, take your odometer reading at the beginning and end of the year.

Proving Business Related Expenses

The IRS looks very carefully at car expenses for small businesses. They want to see that the expenses were truly business-related because non-business expenses for use of a car are not deductible. The IRS requires that you have detailed records that are:

• Noted at the time of the expense (not weeks or months later)
• Detail the date, the reason for the trip, and other information to show that the car travel was business-related

You don't have to include these records with your business tax return, but you should have them in case of an IRS audit. Since you can't make them up after you are notified of an audit, you will need to keep good travel records for your business from the very beginning, making it a habit of tracking the information noted above.​

What Car Expenses Can I Deduct?

You can deduct all ordinary and necessary expenses related to business travel, but no personal travel.  If you have met the qualification noted above for your home business as your primary location, you can then deduct expenses from your home for car travel to and from locations where you do business. For example, you can deduct travel to and from: 

• The home of a client
• The office store where you buy office supplies
• Temporary job sites where you work for clients
• Places where you meet with clients, customers, or business advisers
• Your warehouse or the place where you keep your business inventory
• A convention center where you participated in a business seminar

In general, you can also deduct expenses for overnight business travel to and from your home-based business, just as you can for other business travel, including mileage or airfare, lodging, meals, and entertainment expenses, so long as those expenses aren't considered "lavish or extravagant" and aren't part of an indefinite work assignment.

How Do I Determine My Deduction?

You can use the standard mileage deduction rate set by the IRS, which changes every year, or you can keep track of actual costs for all car-related expenses.

Both the standard mileage and actual cost methods have advantages and drawbacks. Using the standard mileage rate is less trouble because all you have to do is set out the miles traveled for business purposes, but the actual cost method sometimes results in higher deduction amounts.

Keep Good Records

Remember, although business travel to and from your home-based business is deductible, it must be documented and recorded at the time of the trip. Don't get caught shorthanded without these documents in the event of an IRS audit of your business.

Frequently Asked Questions (FAQs)