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How To Deduct Commuting Cost ?

  Sanjiv Gupta CPA  Published 
How To Deduct Commuting Cost ?

Have you thought about deducting your commuting expenses?  Most of us living in the Bay Area drive a long distance to get to work and would love to deduct our growing commuting expenses. 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 costs.  You can establish a home office and deduct the cost of traveling between your home office and any other location where you conduct the work-related activity.  Activates such as meeting with clients for interviews or business presentation can be considered as work-related.

To take advantage of this kind of deduction, you must have a home office aka the principal place of your business.   You can only deduct the commuting cost from the “principal place of your business”.  The good news is that you get to decide where you want to set up the “principal place of your business”. Consultants and self-employed will find it very convenient 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 a partner or member of multimember LLC.

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