We absolutely, positively don’t like commuting mileage. You should dislike it, too. It’s personal. It’s not deductible.
But with knowledge, it’s avoidable.
Let’s eliminate commuting and make those trips from your home to your office deductible.
The law gives you two ways to eliminate commuting from your home to your outside-the-home office:
- Make a temporary business stop on the way to the office.
- Establish a home office that qualifies as a principal office.
Temporary Business Stop
The temporary business stop strategy is designed for the home that contains no home office. In this case, the stop turns a commute from your home to the office into a deductible business trip.
Example 1. Sam, a property and casualty insurance agent, does not claim a home-office deduction. He has to photograph a property before the insurance company will issue the policy. Sam’s trip from his home to the property and from the property to his downtown office produces business miles.
Example 2. Sam, the guy from Example 1, drives from his home to his downtown office. That’s a non-deductible commute.
Caution. If your only office is in your home and that office does not qualify as a principal office, then the IRS labels your trip from your home to a business stop the “first stop,” and that trip is a non-deductible commute.
Example 3. You have an office inside your home that does not qualify as a principal office, and you have no office outside the home. You drive 17 miles to a business stop and then return home. Because your only office is inside the home and it does not qualify as a principal office, your 34-mile round trip is a personal non-deductible commute under the IRS’s first and last stop rule.
If you have both a downtown office and a principal office inside your home, you have no commuting mileage from your home to your downtown office. You don’t need to work in your home before you leave for the office. You simply need an office in the home that qualifies under the law as a principal office.
Example 4. You have an administrative office in your home that qualifies as a principal office. You drive 11 miles from your home to your downtown office, work all day in your downtown office, and then drive the 11 miles from your downtown office back home. This 22-mile round trip to and from your downtown office is deductible as business mileage.
If you would like to discuss business mileage, let’s talk. Please send an email to firstname.lastname@example.org.