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IRS Commuting Rule: Mileage Rules & Commute Definition



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If you drive your car for work, you can take a mileage deduction on your taxes. Yet, many people don’t know the IRS has some strict rules on what is deductible business driving. There’s no such thing as a “commuting to work tax deduction.” But there are circumstances where your drive from home could be tax deductible. Learn about the IRS commuting rule.

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IRS Commuting Rule: Commute Definition

The IRS defines your commute as “transportation between your home and your main or regular place of work.” Your “home” is the place where you reside.

Your trip between your home and your regular or main job is never deductible. A trip between your home and temporary work location is deductible if your main job is at another location. Your commute between home and second job is never deductible on a day off from your main job. Your trip between your regular job and temporary job is always deductible. Likewise, so are trips between your main and second job. You can always deduct drives between temporary work locations and a second job.

Example: Ryan is a real estate agent in the Denver area. When he drives from his house to his office, those trips are not deductible. But he can deduct trips from his house to open houses or drives from his office to meet clients. Of course, Ryan must keep track of his miles in order to back up his deduction.

How To Know If Driving From Home is Tax Deductible

The basic rule that the IRS follows is that commuting is a personal expense that is never deductible. Commuting occurs when you go from home to a permanent work location—either your:

  • office or other principal place of business, or
  • another place where you have worked or expect to work for more than one year.

Example: Kim runs her business from an office in a downtown office building. Every day, she drives 20 miles from her suburban home to her office and back. None of this commuting mileage is deductible.

It is still considered commuting even if a trip from home has a specific business purpose. If you need to haul inventory or supplies from your home, some of those costs are deductible. This could include the costs of renting a trailer or other equipment.

You can’t deduct a commuting trip because you work during the trip. Making business calls or listening to work-related tapes won’t cut it. Having advertising on your vehicle won’t convert a commute into a business trip either.

The Commuting to Work Tax Deduction

The IRS commuting rule makes it tougher to figure out which drives from home are deductible. Here are some of the opportunities for small business owners to maximize their tax deductions:

  • Commuting is never deductible
  • Working during your commute doesn’t make your trip deductible
  • A qualifying home office can nullify the commuting rule
  • Travel between home and a temporary work location is deductible.

Commuting to Work Tax Deduction: Made Possible with a Home Office

One way to avoid the harsh IRS commuting rule is to have a qualifying home office. In this event, you can deduct the cost of any trips you make from your home office to another business location. The commuting rule doesn’t apply if you work at home because you never commute to work. With a qualifying home office, you’re already at your work.

Your home office will qualify as your principal place of business
 if it is the place where you earn most of your income or perform the administrative or management tasks for your practice. You can increase your deductions for business trips with a qualifying home office.

Example: Kim maintains a home office where she does the administrative work for her business. She also has an outside office where she does her other work. She can deduct all her business trips from her home office. This includes the 20-mile daily trip to her outside office. Thanks to her home office, she can now deduct 100 miles per week as a business trip expense. This was a nondeductible commuting expense before she established her home office.

How About a Temporary Work Location?

The IRS commuting rule also doesn’t apply when you travel between your home and a temporary work location. A temporary work location is any place where you realistically expect to work less than one year. It can be inside or outside of the metropolitan area where you live.

Example: Sally has an office in a downtown office building; she does not have a home office. Acme Corp. hired her to perform consulting work. This requires that she drive to Acme’s offices, 10 miles away from her home. The project is expected to last three months. Sally may deduct the cost of driving from home to Acme Corporation’s offices.

Temporary work locations are not limited to clients’ offices. Any place where you perform business-related tasks for less than one year is a temporary work location. Stopping at a temporary work location converts the entire trip into a deductible travel expense.

Example: Eleanor’s business office is in a downtown building. She has no home office. One morning, she leaves home, stops at a client’s office to drop off some work, and then goes to her office. The entire trip is deductible because she stopped at a temporary work location on her way to her office.

Once you’re sure your drives from home are deductible, be sure to track all your miles. Without an accurate mileage log, the IRS can reject your mileage deduction—even if you have the right to take a commuting to work tax deduction.

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3 comments

  1. Myrna says:

    My husband and I claim our 18 year-old daughter as our dependent because she is a full-time student. She has a part-time job as a nanny. She has all the appropriate withholding taxes taken out of her paycheck. However, part of her responsibilities is driving the kids to and from various places in her car. Is there any way for her (or us) to deduct her mileage?

    • Steven Rios says:

      I forwarded your question to our tax experts and this is the response I received.

      “Your daughter will remain a dependent on your return as long as she is a full time student in the tax year you are filing and under 24 years old. You receive your daughters exemption on your tax return. Your daughter will file a tax return checking the box on Form 1040EZ “someone can claim you as a dependent “. The instructions will allow your daughter a standard deduction but no exemption deduction for your daughter on her tax return. Because your daughter has an intact standard deduction the employee business expense for driving as a nanny will most likely not exceed the standard deduction. Your daughter may want to ask her employer for a tax free reimbursement for her car expenses. Standard mileage can be reimbursement up to 53.5 in 2017 tax free to your daughter and with no employer taxes to her employer. You also may want to check with your insurance agent about your daughters extra driving and passengers to make sure no extra coverage is needed.”

      https://www.taxconnections.com/taxQuestions/My-husband-and-I-claim-our-18-year-old-daughter-as-our-dependent-because-she-is-/1514

      If you have any further questions, feel free to visit our website and ask questions to our tax experts at https://www.taxconnections.com/taxQuestions

  2. John R. Dundon II, EA says:

    GrEAt post. Thank you! #EnrolledAgent

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