Which taxpayers can deduct commuting expenses?
I get frequently get requests from clients that they wish to deduct their exorbitant commuting expenses, especially folks traveling in the bay area. Folks here travel incredible distances to get to work!
Well, for the benefit of the taxguru members let me answer this recurring question facing taxpayers and tax professionals.
Per the IRS, "the cost of getting to and from your workplace is never deductible. Also, taking public transportation or driving to work is a personal expense, regardless of how far your home is from your office."
However, the IRS states that, "taxpayers might be able to deduct some portion of commuting costs if that taxpayer works at two places in one day, whether or not for the same employer." In this circumstance, yes the taxpayer may deduct the expense of getting from one workplace to the other.
Taxpayers may can deduct commuting expenses related to other work-related travel, such as visits to clients and out-of-office business meetings.
Now, if a taxpayer is self-employed, these commuting/travel expenses would be deductible on Schedule C.
But, if the taxpayer is a salaried employee, these commuting/travel costs must be claimed as unreimbursed business expenses on Form 2106 which are then transferred to Schedule A and subject to 2 percent of your adjusted gross income on Schedule A.
It is extremely important that taxpayers should maintain excellent mileage and commuting records.