You drive to work, drive to lunch, drive to the post office, drive for your charity, drive to the doctor, drive kids to sports, drive to the computer, drive to bed… ok maybe not the last two. But it sure seems like there’s a lot of driving to be done if you don’t live in a big city like Jackson Township and Dover, Ohio.
With all this driving, what can be deducted?
People who work from home have it good. They have to drive exactly zero miles to get to work and it takes ten seconds to get there. However, not everyone has it good. Many, many people have to drive to work, and daily traffic patterns say to as much. i.e. traffic jams. Many people ask me, “Hey, can’t I deduct driving to and from work?” You can deduct a lot of different types of miles in different circumstances.
Mileage While At Work
No matter what job we have, it seems at times we have to make trips in our car for various business reasons. A run to the bank. Meeting with people over lunch. Showing that house. That mileage will count as business mileage because if you work more than two places in a day, you can count the expense from getting from one to the other.
In general, a taxpayer’s daily transportation expenses incurred in going between the taxpayer’s home and a regular work location have long been considered nondeductible personal expenses. Also known as sitting in traffic during blizzards, construction, and rubber necking motorists. An important factor is where your work location is. That is because there are a few exceptions. Among them are:
Temporary Work Location – If you have at least one regular place of work, then transportation to a temporary work location may work if it is the same trade or business. Temporary generally means less than one year. What constitutes a regular place of work can be squishy since it varies by circumstance. Things to look at are is it short term and irregular? Or is it regular and long term?
One example the IRS has given is a doctor who visits several different offices and hospitals regularly by driving from his home to that location. They said those places are his regular work locations and the commuting is not deductible. (PLR 9806007) Also think of a construction subcontractor with no regular work location. In that case the metropolitan area for all practical purposes is his regular work location and the distance from home to first work location in the area is nondeductible commuting. Tricky isn’t it?
Home Office – In this case if you have a home office as the principle place of business, the miles from there to other work locations in that trade are deductible and wouldn’t be excluded. Another hurrah for the work from home people! Hurrah!
The IRS has a great chart that illustrates this. I’ve noticed most people do not deduct miles according to this IRS chart. It may be wise to do so.
Mileage vs. Actual
With the amount of times this issue keeps coming up you’d think this was a MMA championship match. Its rigged though. Mileage almost always wins. This is mainly because people have a hard time keeping exact records of actual auto expenses. (This would be things like gas, oil, tires, etc.) Most people keep track of miles. Or at least they should. How many of us have had good intentions, even put a notebook in the car, and found it five months later permanently bent into an MC Escher sculpture while trying to find a tissue in the glove compartment? The deduction can be especially valuable if you are self-employed. And if people saw how much money they would save by keeping a proper mileage record, I think everyone would do much better.
The mileage rate is changing all the time. And sometimes they even split the mileage rate in the middle of the year like they did in 2011. Nothing like adding confusion to the already confused. But that’s the way it goes. On top of that it gets even more confusing if you need to switch from mileage to actual expenses. You are not allowed to go the other way, however.
So it is likely we all have business miles at some point. The way we deduct it, keep track of it, and when it is deductible can vary like moods of a teenager. But if all the blocks fall into the right place, we can save a bundle on taxes