How To Deduct Commuting Cost ?

How To Deduct Commuting Cost ?

Have you thought about deducting your commuting expense?  Most of us living in Bay Area drive a long distance to get to work and would love deduct our growing commuting expense. So, here is what you need to know about deducting commuting expenses

Self-employed or contractors (aka 1099 employees) can take advantage of deducting commuting cost.  You can establish a home office and deduct cost of travelling between your home office and any other location where you conduct work-related activity.  Activates such as meeting with clients for interviews or business presentation can be consider as work related.

To take advantage of this kind of deduction, you must have a home office aka principle place of your business.   You can only deduct commuting cost from “principal place of your business”.  Good news is that you get to decide where you want to set up your “principle place of you business”. Consultants and self employed will find it very convent to set up their residence as their principal place of business.  Please note that in order for your home to qualify as “principal place of your business” it must be used regularly and exclusively for management and administrative functions of your business.

Now that you have your base office established, you can deduct your commuter cost between your home office and work locations by car.  You can write off the standard business mileage allowance or you can write off the actual expenses including depreciation of your vehicle.

You take the deduction by filing Schedule C if you are a single member LLC or sole proprietor or on Schedule E if you are partner or member of multimember LLC.

Still have question about deducting your commuter deduction – simply leave us a comment here.

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  • Ravikmitt

    Confusing Info: Some people asked this question on your
    radio show about their spouses who are in India but I am not sure if info
    relayed was correct. Giving info I found on IRS below.


    Nonresident alien or dual-status alien

    A joint return generally cannot be filed if either spouse
    is a nonresident alien at any time during the tax year. However, if one spouse
    was a nonresident alien or dual-status alien who was married to a U.S. citizen
    or resident alien at the end of the year, the spouses can choose to file a
    joint return. If you do file a joint return, you and your spouse are both
    treated as U.S. residents for the entire tax year. See chapter 1 of Publication

  • Nagpal_sunil

    I discussed the opportunity with you regarding
    doing a 1099.  Is it better to sign a per
    diem certification that way a part of the income for working remotely from
    primary residence is tax deductible?