Learn About Deducting Mileage for Travel
Getting to work can be expensive for some people, particularly those who live a considerable distance from their places of employment. It would be nice if you could claim a tax deduction for some or all of the costs associated with commuting to your job. Unfortunately, most people cannot.
"Generally, commuting to and from work is a nondeductible personal expense. There are exceptions, however, when the taxpayer is required to travel outside his or her metropolitan area on a temporary basis," said Kris Siolka, EA from the National Association of Tax Professionals.
Traveling Away From Home
What's deductible and what's not begins with your "tax home."
"Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located," the IRS explains in Publication 463.
In plain English, commuting might qualify as an itemized deduction if your employer requires that you travel from one business location to another, such as from your regular place of employment to a branch office, a client's office or anywhere else for the purpose of doing business on your employer's behalf. Your employer cannot reimburse you for mileage, however, or the expense becomes non-deductible. You cannot deduct expenses associated with traveling from own your home to your tax home.
If you qualify, you can claim this deduction as an employee business expense using Form 2106 and Schedule A. You must itemize rather than take the standard deduction, and your total employee business expenses must exceed 2 percent of your adjusted gross income. You can claim a deduction for the balance over this amount.
When You're Assigned to Temporary Work
The IRS also allows a deduction for mileage when a taxpayer is "traveling away from home" for a temporary assignment. Again, "away from home" means your tax home, not necessarily where you live. If you drive from home to your regular place of employment, it's not deductible, but if your employer requires that you work somewhere else, this mileage may be deductible.
"A temporary assignment in a single location is one that is realistically expected to last (and does, in fact, last) for one year or less," according to Publication 463. This temporary location is your new place of employment for a period of time.
The Bottom Line
If you travel 800 miles a month from home to work on an offshore oil rig, this does not qualify. Even if the location of the rig changes, your commuting expenses would be a non-deductible personal expense because each rig is your regular place of employment and it's your tax home.
But if your employer puts you on desk duty in its home office for a period of time with the understanding that you will return to work on the rig in less than a year, travel to this location qualifies. If you have to drive from the home office to the rig to do an errand for your employer, this qualifies, as does driving from the office–or from the rig, for that matter–to a client's or customer's location or a business meeting.
So what exactly can you deduct? The standard mileage rate is 53.5 cents per mile as of January 1, 2017. You have the option of claiming a percentage of your actual vehicle expenses instead, including gas, insurance, parking, tolls, repairs, and depreciation. The percentage is your business miles versus personal miles. In other words, if you drive 36,000 miles a year with 18,000 miles dedicated to business use and 18,000 to personal travel, you can deduct 50 percent of your actual expenses.
The rules change dramatically if you’re self-employed. Whenever you leave your business location, whether you work from home or maintain a business location elsewhere, you can begin tallying up your miles and costs the moment you leave that place as long as you’re traveling for business purposes.
But the "business use" rule still applies. If you visit a client 20 miles away from your place of business, you can take a deduction based on 40 miles for the round trip. But if you make a side trip on your way home to stop for dinner with friends, and if the restaurant is 10 miles out of your way, your deduction is still based on 40 miles. Those extra 20 miles don’t count–unless, of course, you’re meeting for business purposes.
NOTE: Tax laws change periodically, and you should consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.