![]() ![]() Therefore, they believed that their trips between home and the worksites were business trips not commuting miles. They argued that because they go to a different client’s house every day or every few days, they don’t have a regular work location. The two most common situations I’ve seen are: 1) Various types of home contractors ranging from renovations to landscaping. The definition often isn’t what you’d expect. Remember that any time you see words like “regular work location,” there’s probably a pile of technical IRS rulings that define what those words mean. There are also rules where it doesn’t count as a commute if you’re not going to your regular work location. Employee Job -> Home -> Side Hustle = Not Deductible (Commuting Miles).Side hustle -> Employee Job = Deductible (Business Trip).Employee Job -> Side Hustle = Deductible (Business Trip).Advertisementsīut remember the key is still between business locations. The IRS still considers you to be traveling between two business locations.Įven though employees normally can’t deduct even business trips, the IRS assigns that business trip to your self-employed work. Traveling Between Your Main Job and a Side HustleĮven when you’re an employee at your main job (or even a second job), leaving that job to travel to another job where you’re an independent contractor counts as a business trip. If you leave your office to visit a client during the day, that’s a business trip that’s deductible. That’s an easy situation - you can’t deduct your commute. Let’s say you’re an independent contractor, but you rent an office and go there to work every day (just like an employee does). So what is a commute?Ī commute is driving back and forth between work and home. If you spent $1,000 on car insurance during the year, you can deduct $400 (not $750 and definitely not $1,000). For example, say you drove 40% for business trips, 35% for commuting, and 25% for personal reasons. With the actual expenses method, remember that you’re still tracking your mileage to determine the business portion of your expenses. With the standard mileage deduction, your commuting miles don’t go in your business miles and you don’t deduct them. It’s a good point to quickly note that commuting miles matters for both the standard mileage deduction and actual expenses method. Quick Note: Standard Mileage versus Actual Expenses Method The reason that it’s important to separate out commuting miles here is that there are special rules for what’s considered part of your commute (personal, not deductible) and what’s considered a business trip (deductible). That’s because commuting miles are personal miles. While car insurance companies usually split those three types of miles up, most of the tax guidance you’ll see only talks about business and personal miles. That’s when you drive between work and home. The last type of mile is a commuting mile. That’s when you drive around for things like shopping, going to church, or heading to a park. The second type of mile is a personal mile. That’s a mile that you drive while working that you can claim a tax deduction for. The first type of mile is a business mile. (The special deductions for medical trips, volunteer work, or moving costs aren’t relevant here.) If you’re going to deduct mileage or your vehicle expenses as an independent contractor or small business owner, there are three types of mileage you need to be aware of. There are IRS rules that allow employers to provide a tax-free reimbursement for certain commuting costs like parking or transit passes. Can employees deduct commuting miles?Īs usual, I’m going to quickly disappoint employees before getting into independent contractors and small business owners.Įmployees can’t take a tax deduction for mileage or other commuting expenses. When you claim your car expenses, it’s not as easy as saying “for work = business deduction.” You have to understand the concept of commuting miles. ![]()
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