Do you incur expenses commuting to and from work? Generally, you can’t deduct these transportation costs. The IRS views commuting as a purely personal expense even though you’re going to work for business reasons. And it doesn’t matter if you’re driving your own vehicle or if you travel by bus, rail, taxi or a ride service like Uber or Lyft.
To qualify for transportation deductions, you must be traveling away from your tax home to a business location. For this purpose, your tax home is generally your principal place of business, not the place where you live, eat and sleep.
But that doesn’t mean you can’t deduct some transportation expenses that are in the nature of commuting, but fall outside the technical definition. Here are four prime examples:
- Working from home: If you’re self-employed and your home office is your principal place of business, your tax home is the same as your regular home. In this case, you can deduct the cost of visiting a client or customer across town as long as you keep the proper records. But if you stop for a loaf of bread on your way home at night, the portion of the trip representing personal travel is nondeductible.
- Multiple business locations: Suppose that you’re based at one of several local job locations and travel between them. For instance, you might be an ophthalmologist with a couple of offices within the county or a bank officer overseeing multiple branches. The cost of the travel between the two business locations, regardless of the method, is deductible. However, if you don’t go directly from one place to the other, your deduction is limited to what it would have cost you for direct travel.
- Short business stops: It may be advantageous for you to stop off and visit a client or customer on the way into work or on the way home. Accordingly, you may deduct the cost attributable to the travel between your regular place of business and the client or customer’s place of business. But the rest of your commuting remains a nondeductible personal expense.
- Temporary assignments: Your business may require you to work at a distant job site for a short period of time. Instead of making a long commute each day, you might decide to stay close to the work site and come home weekends. Assuming that the job lasts no more than a year, it qualifies as a temporary assignment. This means you can deduct your lodging and meal expenses, within certain limits, plus the travel between the distant work site and home.
Naturally, detailed record keeping is required. The IRS is known to be especially suspicious when it comes to deducting travel expenses, so make sure your claims can stand up to any challenges from the nation’s tax collection agency. Your professional tax advisor can provide guidance.