Many business travel and work-related expenses are deductible on your federal tax return. Unfortunately, the Internal Revenue Service doesn't allow taxpayers to deduct the cost of their commutes regardless of the distance they travel. However, if you are traveling to a temporary job site, attending a business meeting or traveling from one business location to another, you may be able to deduct commuting expenses.
Regular Commute
Typically, the IRS only allows you to deduct travel expenses if they relate to your business. If you are an employee traveling from your home to your regular place of employment, the expense isn't tax-deductible. However, if your employer requires you to use your own vehicle while on the clock, or if he requires you to temporarily commute to another job site or training location, you can deduct the cost of your travel.
Business Travel
If you own a business or are self-employed, you can deduct the cost of travel expenses that relate to your business. If you have an office in your home, you can deduct the cost of traveling between your home and your other office locations or business-related destinations. If you don't have a home office, you can deduct only the expenses related to travel between office locations or other business-related destinations.
Calculating Deductions
If you are able to deduct mileage you traveled for business purposes or while on the clock, you can determine your deduction using the standard mileage rate, or you can calculate a percentage of each travel-related expense and deduct the total. To use the standard mileage rate, you must multiply your total business mileage for the year by the IRS' standard rate and deduct the result from your taxable income. To deduct a percentage of each travel-related expense, calculate the percentage of total miles traveled during the year that related to business or work, multiply that percentage by each of your deductible expenses and deduct the total from your taxable income.
Considerations
If you use your own vehicle while working, you can deduct only expenses related to the mileage you travel while you are on the clock. If you own a business or are self-employed, you can deduct travel expenses from your home to other places of business only if you have a home office that you don't use for any other purpose.
References
- SmartMoney; Tax Tips: Deduct Your Commuting Costs; Bill Bischoff; March 2011
- IRS.gov: Transportation
- Internal Revenue Service. "Tax Reform: What’s New for Your Business," Pages 3–4. Accessed Oct. 19, 2019.
- Internal Revenue Service. "Tax Reform Provisions that Affect Individuals." Accessed Oct. 19, 2019.
- Internal Revenue Service. "Tax Cuts and Jobs Act, Provision 11011 Section 199A - Qualified Business Income Deduction FAQs." Accessed Oct. 9, 2019.
- United States Congress. "H.R.1 - An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018." Accessed Oct. 9, 2019.
- Social Security Administration. "If You Are Self-Employed," Page 1. Accessed Oct. 9, 2019.
- Internal Revenue Service. "Topic No. 554 Self-Employment Tax." Accessed Oct. 9, 2019.
- Internal Revenue Service. "Publication 587 (2018), Business Use of Your Home." Accessed Oct. 9, 2019.
- Internal Revenue Service. "About Form 8829, Expenses for Business Use of Your Home." Accessed Oct. 9, 2019.
- Internal Revenue Service. "Publication 535 (2019), Business Expenses." Accessed March 16, 2020.
- Internal Revenue Service. "Travel, Gift, and Car Expenses," Page 5. Accessed Oct. 9, 2019.
- Internal Revenue Service. "Tax Guide for Small Business," Page 40. Accessed Oct. 9, 2019.
- Internal Revenue Service. "Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)," Page 2. Accessed Oct. 9, 2019.
- Internal Revenue Service. "Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)," Page 18. Accessed Oct. 9, 2019.
Writer Bio
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.