What Are Commuting Costs?

Transportation costs between your home and business are generally considered nondeductible commuting expenses.

However, if you are self-employed and maintain a home office as your principal place of business (i.e. you do administrative work there, such as bookkeeping, filing, prepare financial reports, prepare invoices), transportation costs between your home office and your client/customer/prospect locations are deductible.

The commuting expense rule applies whether you are:

  • An employee, or
  • Self-employed and have a business location outside your personal residence. However, as mentioned above, if you maintain a home office the cost of traveling between your home office and your customers/clients/prospects, are deductible.

No transportation deduction is allowed in the following situations:

  • You get jobs through a union hall:
    • The cost of commuting from the union hall to assigned jobs is not deductible.
  • You join a car pool:
    • The cost of driving yourself and your passengers to work is not deductible.
  • Business discussions:
    • While on your way to work you discuss business. Sorry, no deduction allowed, your transportation cost is still considered a commuting expense.
  • Expenses while commuting to your regular place of business:
    • The costs of phone calls from your car to a business associates while on your way to work are not deductible. The IRS says any expenses incurred while you are commuting are not deductible. (see exceptions)

When You May Deduct Commuting Costs

You may deduct commuting expenses under the following circumstances:

  • Business trips out of town:
    • Transportation costs from your hotel to your first business call of the day and all other transportation costs between business calls are deductible.
  • Using your car to carry tools (the additional cost rule).
    • You can deduct costs which are considered additional costs over your normal commuting costs.
      • Example: You rent a trailer for $5 per day to carry your tools to work. The trailer attaches to the back of your car.
        • You can deduct only the extra $5 per day for the trailer not the normal cost of driving your car to work.
      • Example: You always take the train to and from work at a cost of $5 per day. You now have to carry your tools to work, so you rent a trailer for $5 per day and attach it to the back of your car. Your car costs you $6 per day (one dollar more than the train).
        • You can only deduct the $5 for the trailer. The extra $1 per day to drive your car over what the train costs is not deductible; it is still considered a commuting expense.
      • If you carry the tools in the trunk of your car or the back seat, sorry, no deduction.

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