Deducting Commuting Expenses
Commuting is the time you spend driving to and from your home to your business. Unfortunately, expenses related to commuting and are not deductible because the IRS defines them as personal expenses. Even if you are working while commuting, these expenses remain un-deductible. Using your car to transport materials for work is an example of a commuting expense. Talking on a cellphone about business while commuting is another example. Two exceptions that leave room for deducting commuting expenses are the temporary distant worksite and the home office.
Deducting Commuting Expenses with a Temporary Distant Worksite
A “Temporary Distant Worksite” exception is the cost of going between home and a temporary work location. A work location is considered temporary when it is expected to last for no more than a year.
Deducting Commuting Expenses with a Home Office
The “Home Office” is the second and most common exception when it comes to deducting commuting expenses. The costs of travel between home and a location that is in the same business can be deducted from a taxpayer. In order for these costs to be deducted one of the following tests must be passed.
- The principal place of business test requires you to use your home office “exclusively and on a regular basis” as your principal place of business. This entails two smaller tests called the “management or administrative activities” test and the “relative importance” test. The former means that you should use your home office for administrative or management activities of your business. The latter means that your home office should be the most important place where you conduct your business.
- It is used on a regular basis to meet with clients, patients, or customers.
- You are entitled to home office deductions if your office is in a structure that is separate from your house, like an off-site garage.