Taxi fares can add up quickly, making many people wonder whether they are tax deductible. Taking a taxi to and from your job, or while you run personal errands, usually doesn't qualify for a deduction, but there are situations in which you can deduct taxi fare. These circumstances include expenses incurred while performing volunteer work, traveling on business or visiting your doctor.
If you are employed outside the home and must report to an office or workplace each day, the IRS considers cab fare to your place of business a "personal commuting expense." You cannot deduct this expense from your taxes. However, if you must take a taxi while traveling on business or to other locations in your area as part of your job, and your employer doesn't reimburse your expenses, you can claim these costs as a deduction.
You cannot deduct expenses associated with finding your first job, a job outside your current field or if you haven't had a job for awhile. (The IRS doesn't state how long your unemployment must be, but it does disallow tax deductions for job searches after a "substantial break" in employment.) However, if you want to find a new job in the same field as your previous job, you can deduct your costs, including cab fares to job interviews.
If you are self-employed, you can deduct the cost of transportation necessary to doing business as well as taxi fares incurred during business travel.
The time you spend on volunteer work doesn't qualify for a tax deduction. You can, however, deduct expenses you incur while performing charitable work. For example, if you take a cab to and from the volunteer site, you can deduct this expense. Similarly, if you are out and about doing work for the charity and need to take a cab, you can deduct the cost of the taxi ride.
If you take a taxi while visiting a doctor or another health care professional, you can deduct your fare, as well as other transportation costs, as a medical expense.
Make sure that you get a receipt from a cab driver before leaving a cab, because you might need the receipt to document your tax deduction in case of an audit. In some areas, you can pay cab fare with a credit card, which provides you with an easy way of tracking and documenting your deductible taxi rides. The IRS may also want to see further documentation of the necessity for your cab fare expense, such as the names of the business associates you met with after taking a taxi to their location.
- Internal Revenue Service: Publication 17, Your Federal Income Tax
- Internal Revenue Service: Publication 463 (2010), Travel, Entertainment, Gift, and Car Expenses; Transportation
- Nolo; Tax Deductions For Your Charitable Contributions and Volunteer Work; John Suttle and Twila Slesnick
- Daily Finance; 8 Commonly Overlooked Tax Deductions; Kelly Phillips Erb; January 2010
- Small Business Administration: Small Business Expenses and Tax Deductions
- Nolo; Preparing for a Business Audit; Frederick W. Daily
- Internal Revenue Service: Publication 552, Recordkeeping for Individuals
- Internal Revenue Service: Publication 502, Medical and Dental Expenses - Transportation