What are Commuting Expenses? Are they Deductible?

The time you spend driving back and forth between your home and business is considered commuting. The expenses you incur to facilitate the transportation are commuting expenses. Generally speaking regardless of how far away your home is from work, the IRS considers this a personal expense, not a business expense and therefore cannot be deducted as such. Even if you are making business calls from the car, the vehicle costs are still not deductible. You could expense the charge for cell phone as business expense, but not the car!

Although many commuting expenses are not, some may be deductible. There are always exceptions; here are a few of the most common ones:

Home Office Exception

If you maintain your office in your home, you can deduct the daily costs of travel between home and another work location in the same trade or business, regardless of distance and whether the other location is regular or temporary. But make sure you must be able to substantiate the auto expenses that you claim through adequate records such as a log or diary. The deduction can be based on standard mileage rate or actual expenses.

It is important to remember that your home has to be the principal place of business. What does this mean? You must meet the tests for deducting expenses of a home office. It’s irrelevant whether you do in fact claim the home office deduction or not. Once your home is established as the principal place of business, you can deduct expenses to travel to any other work locations.

Temporary Work Location Exception

You can deduct travel expanses to a place where your work assignment is expected to last one year or less. However, the temporary worksite

• Has to be outside of your metropolitan area and
• You must have a regular or main job at another location.

Second Job Exception

In case you have multiple jobs, you can deduct the travel costs of getting from one workplace to another, even if they are with same employer. The cost of travelling back home from one job and from home to another job are not deductible; the transportation has to be directly from one job to another.

If you have questions about whether you are entitled to deduct your job/business related travel expenses, please contact Parul Bansal, CPA or any member of the KLR Tax Services Group.