Temporary Work Locations & Commuting Expenses Tax Deductions

“I’m an independent contractor and I use my personal car to travel to different work locations. At the end of the year, what commuting mileage is tax deductible and what isn’t?”

The IRS defines a temporary work location as a work location expected to last for less than a year. For example, an employee’s or contractor’s commute between their home and regular work location is not a deductible business expense. However, if the work location is temporary than the daily round-trip commute expenses are tax deductible, regardless of the distance.

Factors that Determine a Temporary Work Location

The employment isn’t temporary if the employment at the work location is expected to last more than one year. Also, the employment is not considered temporary even if it ultimately lasts less than a year. Therefore, in this case the commuting expenses are not deductible. For example, an individual accepts an offer for a new full-time job but resigns within the first year of employment. Also, the work location is no longer considered temporary if the employment was initially expected to last less than a year and later was expected to last more than a year. Further, the work location is no longer considered temporary at the time of realizing the employment will last longer than a year.

What does the IRS Consider Commuting Expenses?

The IRS defines a commute as ‘transportation between your home and your regular place of work’. Please review this article for more detailed information on commuting expenses, How Does the IRS Define Commuting?.

What if I Have More than One Work Location?

If the employee works between two or more work locations the commuting expenses between the two work locations are deductible. This is true even if the employee is employed by two different employers. In the event that the commuter does not go directly from one location to the other, only the amount of the commuting expense is deductible.

No Ordinary Place of Work

Many workers have no ordinary place to work. Meaning, they don’t have a regular office that they go to on a daily basis, Monday through Friday. Instead, these workers are traveling around to different work locations throughout the day and throughout the week.

What commuting expenses are tax deductible if you travel to different work locations for work?

Commuting expenses aren’t deductible if the job requires you to travel to different workplaces around the city where you live. However, if the commuting requires the taxpayer to travel outside of their metropolitan area, then these commuting expenses are deductible. For information about what qualifies as “Away From Home”, review the post, IRS Business Travel Definition for “Away From Home”.

Temporary Work Location vs Travel

Transportation is a travel expense if the temporary work location is outside of the area where the taxpayer lives and it involves overnight stay. A travel expense is not a temporary work location commuting expense. Therefore, the expenses are deducted as business travel expenses instead of deductible commute expenses. For more information on business travel expenses please review the following post, What Qualifies as Tax Deductible Business Travel Expenses.

How do I keep track of my deductible mileage expenses?

1. Odometer log. Enter the start and end odometer readings of your business transportation, Falcon Expenses calculates miles driven and expense reimbursement amount using the custom reimbursement rate set in the app. Check out this article for more information on this feature and its benefits, Falcon Expenses Odometer Log Feature.
2. Start and end addresses. Enter start and end address for a tax deductible commute or transportation, Falcon Expenses calculates the number of miles driven and the expense reimbursement amount. Check out this article for more information on this feature and its benefits, Falcon Expenses Addresses Feature.
3. GPS mileage tracker. Use an integrated GPS tracker to track tax deductible business transportation miles while you are driving. Falcon Expenses will calculate the deductible mileage expense amount for your when the trip is complete. Check out this article for more information on this feature and its benefits, Falcon Expenses GPS Tracker.

About Falcon Expenses, Inc.

Falcon Expenses is an iOS solution for expense tracking and management. Scan receipts, we type merchant, date and amount, auto-track mileage expenses via GPS and log billable hours with an integrated timer. Quickly organize expenses by time period, project or client and easily prepare reports for email to anyone in PDF or spreadsheet formats, all from your phone. Use for reimbursements, taxes, record keeping or invoicing. Falcon Expenses is great for professionals, freelancers, realtors, business travelers, truckers and more. Find out more, here.