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)
Deducting Commuting Expenses