By Dr. James M. Dahle, WCI Founder
One of my favorite tax deductions is to deduct mileage used for business. If you are driving your car for business, you can deduct 58.5 cents in 2022 (up from 56 cents in 2021) for every mile you drive. That's pretty generous, considering that $4 per gallon gasoline for a car that gets 30 miles per gallon costs you 13 cents per mile. Obviously, there are other expenses associated with driving a car including maintenance, repairs, depreciation, and insurance, but give me a break: 58.5 cents is awesome.
How Much Is the Business Mileage Deduction Worth?
Imagine you own a $2,000 car. Now assume a 40% marginal tax rate. How many miles do you have to drive the car to pay for the car? Answer—9,091. Many business owners drive twice that every year. Even if you subtract 13 cents a mile for gas, it's only 11,905 miles to pay for the car. Even a $2,000 car is going to last 12,000 miles. The best part about this deduction is that they give it to you for something you have to do anyway. It's basically free money.
How Does the Business Mileage Deduction Work?
Here's how the deduction works. This is from IRS Publication 463 [2022].
The basic rule is that you can't deduct your commute, but you can deduct everything else.
Commuting vs Business Miles
If you work at two hospitals, for instance, you can't deduct driving into the first one or driving home from the second one, but you can deduct the miles between them. You have to be a business owner, too—paid on a 1099 or a K-1, not a W-2. Unreimbursed employee expenses have never been as valuable since they were subject to the 2% of income floor on Schedule A. Even that went away from 2018-2026—except for reservists, musicians, and actors with multiple employers; fee-basis state/local government officials; disabled employees (costs related to their disability); and educators (up to $250 a year).
Is There a Limit on Business Mileage Deduction?
As long as you're driving for business (and, again, your daily commute doesn't work), there is not a limit on business mileage deduction. But be sure to keep a log that includes where you're going, the date of the trip, and the odometer reading before you start and after you're done, so you have concrete evidence for how many miles you can deduct.
Can You Claim Mileage to and from Work? My Scheme Foiled
Initially, I had this great scheme. Since I have a home-based business (The White Coat Investor), I had a plan to “commute” down the stairs to the home office, then drive “between my businesses” to the hospital and back to my home office, then commute back up the stairs. Unfortunately, it turns out you can't do this. If one of your sites of business is your home office, there is an additional requirement. Both jobs have to be in the same industry—mine are not. It's too bad since it would be worth at least a few hundred dollars a year to me.
I did manage to get a few miles for each business, but it was nowhere near the mileage I drive between my home and the hospital.
Charitable Deduction Mileage Rate
There are other miles that you can deduct as well. Mileage driven for a charitable cause is deductible at 14 cents [2022] a mile. Mileage for medical care (receiving, not giving, and subject to a 10% floor on Schedule A) and moving is deductible at 18 cents [2022] a mile. It's not quite the business mileage deduction, but it's better than a kick in the teeth.
Actual Expenses
You can deduct your actual expenses for business miles instead of the standard 58.5 cents per mile. But you're going to have to be spending an awful lot on your car to beat that 58.5 cent figure. Besides, who wants to keep track of all that? It's bad enough that you have to keep a mileage log. But if you're driving a fancy Audi or Tesla or leasing just about anything, perhaps it would be worth the hassle. Depreciation, car loan interest, and lease payments certainly count toward the actual expenses. You'll just have to decide whether it's worth it to figure all that out, rather than take the standard mileage deduction.
The Mileage Log
If you get audited, you'll need to show the mileage log you're supposed to be keeping. This is supposed to be kept contemporaneously (meaning you write it down when you drive the miles, not reproduce it later). You need the date of the trip, the mileage of the trip (preferably with beginning and ending odometer readings), and the purpose of the trip.
Can My Business Pay for My Car?
Lots of people have heard that your business can lease or even buy your car and have it work out well. Unfortunately, many people are abusing this, and their practice would never hold up in an audit. You cannot have your business buy and pay for the car (essentially paying your transportation costs with pre-tax dollars) and then use it personally. It can ONLY be used for business purposes. Again, commuting is NOT a business expense. Only the business use is a business expense; the rest is taxable income to you. If you're claiming 100% business use for the car, expect an audit. Almost nobody uses their car ONLY for business use. So again, you'll have to keep a mileage log for both business and personal use and then multiply your actual expenses by the ratio of business miles to total miles.
Brand new trucks and large SUVs used more than 50% for business (defined as a vehicle with a gross vehicular weight [not curb weight] more than 6,000 lbs—a Chevy Suburban barely qualifies) are eligible for special depreciation rules. Basically, you can deduct up to $25,000 of depreciation in the year you buy it rather than only 58.5 cents a mile, although it is decreased by non-business use. In addition, all vehicles are currently eligible for 100% bonus depreciation for both new and used (if new to you) vehicles through the end of 2022. Again, this is decreased by non-business use.
How to Deduct Mileage on Taxes
When filing taxes, you'll need to use Form 2106. On line 12, you'll enter the total number of miles, business or otherwise, that you drove your vehicles that year. On line 13, you'll note the number of business miles you drove. On line 14, you'll divide line 13 by line 12 to determine the percent of business use. On line 22, you'll multiply the number of business miles (on line 13) by the mileage rate for that year to determine your business mileage deduction.
The bottom line is that business miles can be a fantastic business deduction, especially on an inexpensive car. Just remember the main rules—only business miles count as a business expense and commuting is never business mileage.
What do you think? Do you deduct business mileage? Any tips for maximizing this deduction?
[This updated post was originally published in 2013.]
Hi, Susie,
You can still deduct your mileage since your employer is paying you for your time, not your mileage. Look at it this way: it’s the same as paying you to work at home but you’ve got travel expense on top of the work, so you (rightly) are allowed to deduct it.
Of course, as an employee, it’s subject to the 2% floor.
You’re exactly right. I jumped to contract labor but now see that she stipulated employer. Good catch.
What is the 2% floor?
Some deductions are limited in that you can only deduct the amount above 2% of your income. Take a look at the bottom of Schedule A to see what I mean:
https://www.irs.gov/pub/irs-pdf/f1040sa.pdf
Unreimbursed employee expenses, including mileage, are one of those. One reason it’s often better to be an independent contractor than an employee.
Hi, Susie, Employees are allowed to deduct only the amount of employee business expenses that exceed 2% of their AGI (Adjusted Gross Income). That means you must first have enough expenses to itemize and then have enough to exceed 2% of your AGI (the bottom line on page 1 of your 1040). For example, if your AGI is $100,000 and your employee expenses total $2,500, you will be allowed only $500 on Schedule A or: ($100,000 * .02) = $2,000. $2,500 – $2,000 = $500. If you have a separate space that is used strictly for a home office, you will also be able to include your home office expenses and related expenses (office furniture, supplies, etc.) in your total employee business expenses. If, on the other hand, you are paid via 1099 rather than W2, you are not limited to this 2% “haircut”. I hope this helps!
Another great post! I’m annoyed that my own CPA doesn’t know or talk about this stuff and this seems to make sense. I have both 1099 and w2. I make about 150k with side business but significantly less than the w2 job. I have home office that is regular exclusive use and have been deducting for several years. Several questions.. The side business is speaker for Pharma in the topic that I practice daily and the w2 is oncology. Does this count as the “same industry”? how and where is this defined? If so then what is the best way to document my “commute” to the home office which is upstairs for me and also the “activity” done in the home office in case of an audit? I primarily schedule various talks, review slidedecks, accounting, literature review, legal work, webcast, etc. Does my calendar count as a record of activity in the tax court? I guess if I’m in court how do I prove that I actually woke up, commuted to the home office then went to work then back to the home office each and every day… as oppose to woke up, went to work, and came back and any side business I did on the computer could of been done anywhere anytime?
Again WCI.. Appreciate all you do!
None of this is defined. It’s all about what you can convince the auditor of in an audit. It might be worth discussing with your CPA for his opinion on those questions, but don’t expect a definite answer from anyone or anywhere, only opinions and if you really dig deep, cases from tax court that may be similar to yours.
Hi, ST, Your CPA should be prepared to defend, in case of audit, that your side business is separate from your profession of oncologist. To me, it is fairly clear that you serve as an expert speaker in your 1099 business and are not in the practice of oncology. The fact that your expertise as an oncologist gives you the knowledge to speak about this topic does not mean you are in the same industry. For example, I would use NAICS code 611699 (All Other Miscellaneous Schools and Instruction, example given is public speaking) when filing a schedule C for your business, which is quite different from the practice of oncology. Check your schedule C – I bet that’s what you’ll find on it.
Of course, your commuting deduction would be limited to travel for your speaking engagements and any mileage related to that business. I would not attempt to make a case that the mileage for driving to your W2 job is deductible. Travel from your W2 job to your speaking business engagements and other requirements thereto would be deductible.
As WCI says, a lot of the tax code is left up to interpretation, but I believe you have a fairly clear-cut case of a separate profession. In my personal opinion, I believe this particular situation is more defined than only opinions. Hope this helps.
Johanna.. I highly appreciate your input! If I understood you correctly.. you would conclude that I have two different professions or industries? W2 is practice of oncology and the 1099 public speaker. But as part of my W2 position.. I have several responsibilities that are expected from my position. I have to give many documented talks to physicians, fellows/residents, students, housestaff throughout the year expected as part of my position as well take care of oncology patients and run clinical trials. My 1099 position is similar as I give primarily speaking engagements to physicians, fellows/residents, students, housestaff throughout the year (except this time pharma organizes the talks), indirectly take care of patients with counseling (these would be at a patient centered symposiums that I participate in 2-3x yearly where many pts would come after my talk to discuss their situation) and participating in an advisory role to pharma regarding clinical trials? Other than administering drugs.. I am doing the same things just in a different order in time spent in teaching, patient counseling, and clinical trials. Would this be a reasonable argument to an IRS audit?
If I do this mileage deduction…. 150k profit through 1099. My potential mileage from home office to hospital and back for the year is around 7000-7500 miles which would result in a tax savings 3-4k? Is the IRS really going to come after me for this? And worse case scenario.. I lose the audit and pay the tax with interest… correct? Not a bad gamble.. I think.
Hi, ST, Although you are doing your best to talk yourself out of it 🙂 you are an employee and you also have a second business, the receipts frpm which you can deduct reasonable and necessary expenses. As I stated originally, your commuting expenses to work would not be deductible. Assuming you perform the duties of your sch C job in a different location from your W2 job, you can deduct the expense of travelling to those assignments. I would NOT recommend you count your drive to your W2 job as a deductible business expense from your sch C job because, as you have stated, the W2 job is where you make your primary living.
To answer your last question, you would also owe penalties.
To me, the biggest advantage to you is the ability to set up a SOLO 401k/profit sharing plan for you and your employee-spouse (if applicable) to contribute from your SE income.
My wife and I are both sales reps with large territories. We both have customers and prospects within 1.5 miles of our home and then continue driving to see existing and potential customers throughout the day. Both of our employers nearest locations are 100+ miles away. Both of our employers offer no reimbursement for mileage / phone / internet / business expenses.
IRS is disallowing our mileage deduction because they want third party records that have mileage written on them. As I understand it, my logs and records are okay, but they want 2 receipts from oil changes / vehicle repairs / brakes etc. from 3rd party maintenance shops.
To save money, I do the oil changes and maintenance and also any repairs I can manage. For our jobs, a reliable and well maintained vehicle is most necessary. Other than changing the oil and filters myself, there was no 3rd party work done on my vehicles in tax year 2013. I provided two of my personal oil change records with recorded mileage to the IRS.
They insist on 3rd party records that have the vehicles mileage on them. After explaining that I did not have any 3rd party work in 2013, they said I should be able to provide Virginia State inspection records to prove mileage. Keeping in mind this is a very small 3 x 5 slip, that you get once a year, I have misplaced them both! Had I known they were worth approx 4K to prove my deduction, I would have put them under lock and key!
The IRS literature never specifically says you have to have state inspection records. Only 18 states even have annual inspection. My wife and I both drive approx 30,000 business miles per year each. Our employers offer no reimbursement and now the IRS wants to disallow my business mileage. This is a big hit to our financial situation!
We also got audited for tax year 2010 and eventually got a “no-change” letter from the IRS after providing very much the same information as our 2013 audit.
Any thoughts or recommendations to resolve this 3rd party record requirement being imposed?
That sounds like a terrible audit to me. Obviously you got picked for it because you’re trying to deduct 60K miles. That’s like a $35K deduction. I think you’re out of luck for third party mileage requirements for the audit. However, you do have the option to go to tax court. All an auditor can force you to do is go to tax court. Make sure the rest of your return is squeaky clean before going for that though. Perhaps the judge will be more lenient than the auditor.
Thanks for the comment. I actually asked the reason for the audits because I wanted to go over any problems with my tax guy. The IRS said tax year 2010 (audit in 2012) was random and that tax year 2013(audit in 2015) was because my 2012 audit of tax year 2010 was “still open” when I filed 2013 return. This seems like a weird reason to audit tax year 2013? It was the IRS that dragged things out until 2013. I did not ask for any extensions and complied promptly to their requests for more info / documentation each time. I do understand your point. It was approx a $31,500 deduction but totally legit! Sales can be a tough gig. You kill your car with miles and hope that at the end of the year it is worth it. In review, If my reliable / well maintained vehicles did not require any 3rd party repairs and I took care of my own maintenance in tax year 2013, why do my deductions get disallowed because I don’t have scribblings on a state inspection receipt? If I resided in Florida or South Carolina there would be no state inspection! This seems to be a mighty specific requirement. By the way, I cannot deduct the cost of inspection on my taxes so why keep the transaction receipt when they put a yellow sticker on my windshield for the police to see that I have indeed been inspected?
I agree it’s unfair. That’s why I would take it to Tax Court if I were you. Or perhaps the auditor will backpedal a bit and offer you a better compromise if you threaten that.
I agree with WCI to go to Tax Court. Most of the cases are settled out of court before they get that far. Plus it would let your auditor know that you are really serious. For your profession, your mileage is not exactly unrealistic.
Stephen, my heart goes out to you. You are one of the (relative) few who are so unlucky as to be netted by an agent trying to prove something. It sounds as if you are being harassed. (You don’t happen to be a Tea Party member, do you? Only half joking.)
If you have kept contemporaneous logs and records of your mileage and expenses, I believe you would have a very strong case in Tax Court. It would be up to the IRS to prove you wrong. Even if you did NOT have written records, or you have incomplete records, the law still allows you to provide an affidavit under penalty of perjury as evidence (I have used this method successfully). See this article by Dan Pilla https://bit.ly/1lMxocA. Dan has been around a long time and is incredibly knowledgeable. I’ve called him for advice and he knows his stuff.
Also Google the Cohan Rule – very old case that proved written records are not required. I sincerely recommend you consider hiring a CPA, EA, or attorney with IRS experience. Don’t roll over! There’s a slight chance you can have your auditor changed if you have been using a non-local advisor. Otherwise, you are probably headed to Tax Court and your auditor is betting you won’t have the tenacity to continue.
I work in a hospital setting. I have a full time job at a hospital in one town and a consistent part time job at a hospital in another town. I work 36 hours a week at my full time and 24 at my part time. I do not work both in the same day. Would any of the mileage to or from these jobs be deductible? I also am required to take call at my primary job after working from 7am-7pm I am on call from 7pm-7am. I have a 30 minute response time and can not consume any alcohol during this time. I am paid a very small hourly rate for being on call. I do get time and one half for my time when I am called out. I do not get paid from when I receive the call only the hours in facility and I don’t get mileage reimbursement. Would my call back mileage be tax deductible?
No.
No, I don’t think so. It’s still commuting even if you go to work 4 times a day.
I have two part-time jobs, both in marketing fields. I maintain an in-field home office as an employee for one of them on record from the company. I am reimbursed from the company for my business mileage/expenses for this job. In my other part-time job I am considered an independent contractor but also use my home to send it the reports the job requires. In this second job, I drive from my home to each location(s) and back, to business meetings, and to a location to pick up supplies needed. Would I be able to claim the mileage used to and from the contracted job locations and my home as business mileage?
*As tax deductible business mileage
Well, you can’t claim something someone else is claiming, so if you’re reimbursed for driving expenses you can’t then deduct them. But it sounds to me like you can deduct what isn’t reimbursed. Although I’ll be honest, you have me confused with the term “in-field home office.” Perhaps what you should do is deduct the mileage between the two jobs and between the independent contractor job and your home.
Rebecca – Yes, I would consider mileage from the contractor job as deductible on your Sched C.
I am a district manager, w-2 employee. I start and end each day working at home, and drive to my various 8 other work sites during each day. I have no set office; my home is my “home base”. I estimate 25% of my work is from home – 8 hour days, 1 hour each morning and evening working at home, 6 hours on road and other job sites. Total, it’s about 18,000 miles/year. Is my mileage deductible, including from home to first job site? Second, if my company gives me (and pays for) a gas card, is my mileage still deductible?
Well, if by deductible you mean unreimbursed employee expenses subject to the 2% floor on Schedule A and assuming you itemize, then yes. You can’t deduct expenses you are reimbursed for, so you’d need to subtract that, and I bet there’s not much of a deduction left there for you after all that, but I could be wrong.
I work as a self-employed sound/audio engineer with a studio in my home where I meet with clients. I also work as a contract ((Form 1099) audio engineer for two audio/visual companies. For each company, I post my availability which is based upon my studio schedule. Before each assignment, I am required to drive to a central location (the same location each time which is the company warehouse) to meet with other members of the “crew” and then take a company vehicle to the jobsite. Following the event, we return to the same location in order to drive home. The question is, of course, are these miles deductible? Thanks for your thoughts.
If you’re working at home before and after going to the central location, then I would say yes. Those are business miles, not commuting miles. I think you could justify that to an auditor. Worst case scenario- the auditor/Tax Court says no and you have to pay back taxes, interest, and possibly a penalty.
If you’re working at home before and after going to the central location, then I would say yes. Those are business miles, not commuting miles. I think you could justify that to an auditor. Worst case scenario- the auditor/Tax Court says no and you have to pay back taxes, interest, and possibly a penalty.
Jon – I would have no hesitation signing your return deducting mileage given this info.. (Btw, signing a return is the “bright line” for CPAs. We are risking our reputation and license in doing so and I wouldn’t sign a return that I didn’t believe I could comfortably defend on audit.) Hope you’ve been taking these miles before now…
Thanks for your comment . . . most of contract events are upwards of 8 to 12 hours and are scheduled on days where I have no studio work. Occasionally, I may have a morning or midday event and can schedule an evening studio session but that doesn’t happen often. Again, thanks for your quick response.
Hi, I am a nurse, and work through an agency so am consider a contractor and I will either sign a contract for a number of weeks or work as needed 3 or 4 days a week. I work at different hospital sites throughout the city. Usually about 3 different sites a year typically. Can I deduct my mileage?
Business mileage, yes. Commuting mileage, no. So the only way to do what I think you want to do is claim the mileage from your home office to the sites is business mileage, not commuting mileage. Whether the IRS buys your argument or not is a bit of a matter of debate as you can see.
Hi, I’m looking for some advise on whether I qualify for any deductions –
I’m a W-2 employee of a company based in TX but live in CA. I work at a client location in CA for 4 days a week and work from home 1 day a week. My employer doesn’t have any offices in CA. The client location is 11 miles from my house. I have a room at home set up as an office where I perform work for the client for an hour or so each day from Mon-Thu in addition to going to the client location, and on Friday I work most of the day from home.
Is my drive to the client location deductible? Can I claim a home office deduction?
Thanks!
If you use that office space exclusively and regularly for business then you can take it as a deduction. There are a few more rules for employees, but I think you’re good. Read more here: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction
As far as the mileage goes, any distance between two work locations is deductible, but it would be only as unreimbursed employee expenses in your case, so there’s a 2% of AGI cap on it. See Schedule A instructions. https://www.irs.gov/instructions/i1040sca/ar01.html#d0e1678
Both the home office and any business mileage are subject to the 2% haircut on schedule A. Sure, you probably can use both as employee business expenses, but I cannot see how you will benefit from either unless you have a lot of other 2%-qualified expenses and/or you have a year with very low income.
I agree. Far less valuable for an employee.
Starting a new job. Independent contractor. If I make 100K in a year and drive 50K miles, How much can I deduct. For easy math sake say the mileage deduction = .50 a mile. At that rate, it would = $25,000 so would my taxable income then drop from 100K to 75K?
That’s right.
Yes if all the miles are for business and you keep a contemporaneous log of your miles driven. fwiw, the current 2016 rate is 54 cents. (The rates sometime change intra-year.)
https://1.usa.gov/1smcrZd
Hi, I am a courier (1099) and I get my calls via txt. I go from home to pickup location and then to delivery location and back home. I get paid by trip rate quote. What miles can I deduct at $ .55.? Other deductions? Thanks for your help.
Do you have a home office? If so, that is your work location and you can deduct mileage from home to pickup and on to delivery. The rate for 2016 is 54 cents per mile. If you are reimbursed for mileage, you will deduct that amount from your total mileage cost. I’m sure you have other deductions (such as for home office), but would need to know more. You should consider discussing this with your CPA/EA.
It’s also important to note that you can choose to use the “actual expense” method instead of deducting mileage. Unless you have an expensive car and/or trade frequently, mileage usually yields the best deduction over a period of years.
i am starting a courier job, delivering pharmaceuticals. the route is 448 miles per day six days per week, which i am paid 205 per day as a 1099 contractor. assuming i work all required days for a whole year i would make 63940 per year. while killing my car driving. 139,000 miles per year. i have a home office , would my miles be deductible at .54 per business miles? if so my mileage deduction would be anout 75,000. is this correct and if so legal?
Yes, this is a perfect situation for deducting mileage. Be sure to keep good records, including non-business use of the vehicle as it is very likely you will receive an IRS request for documentation. I recommend using an EA or CPA for your tax preparation.
Drive the best mileage, least expensive vehicle possible and you will pay for it in a year. In addition to mileage, you can deduct a proportionate amount of interest on the vehicle, property taxes, and parking+tolls.
You might find this blog post useful: “Should I have a home office?” at https://blog.foxwealthmgmt.com/2016/07/28/do-i-need-a-home-office/
TWCI and Johanna, thank you for the detailed mileage deduction explanations!
As a lawyer with a home office, a separate mail box ‘street address’, a second job teaching law classes and two offices in two neighboring cities, I still have a few dumb questions for either or both of you:
– For an audit, would failing to have ‘proper daily logs’ very likely disqualifies the business from claiming any and all mileage deductions? Would I be in trouble for not producing a year’s worth of records?
– Would travel to from the university be an allowable second job (W-2 income) if the classes I teach are in the same field (law)?
– Would supply shopping, post office or FedEx runs, bank deposits, (getting gas?) and other business errands tied to the practice be allowed if done during the travel to and from the second job, whether the 2nd job is allowed mileage or not?
– Would mileage to and from my two regular offices be allowed? These offices are used for client visits, about one hour of client calls a day and to get mail; the home office is the main headquarters.
– Would errands done between trips to and from these offices from any of the other work locations be allowed or do they need to be done separately from the drives between offices?
Thank you for any insight you can provide on any of these!
1. You’d lose the deduction if you didn’t have the records. You can get an app that may help.
2. I think so.
3. N/A.
4. For sure.
5. They don’t need to be done separately, but if the errands are not work-related you can’t count any extra miles.
1. Yes, you must keep “contemporaneous” mileage logs. For all practical purposes, I use my scheduling calendar for business related trips and calculate mileage numbers only a few times per year. I estimate monthly errands driven (25 miles per month in my case).
2. Yes.
3. No.
4. Yes.
Your biggest problem is that you have 2 W2 jobs. That means that your deductible business expenses will be limited to amounts over 2% of your AGI – probably a difficult threshold for you to overcome. Other costs can be lumped in with the employee business expenses (cost of tax advice, for example), but most high-income professionals get very little, if any, deduction after the 2% haircut.
Given your situation, I highly recommend you hire a qualified CPA so that you will have personal advice specific to your situation. My responses are based only upon the limited amount of information available and could easily change based upon a more exhaustive and comprehensive conversation about your overall tax issues.
Thank you, Johanna! If it helps, I’m a sole practitioner, so as the only person working in my firm, I am not salaried. The university job is the only one that gives me a W-2, and I earn less there than from my practice. All other work comes in as 1099 payments.
Here is a sample of a typical day for me:
I leave my home office in the morning to teach > deductible trip
I stop at one of my offices to make some calls > deductible trip
I meet a client at their place of business to pick-up a check > deductible trip
I head to my other office to meet with another client > deductible trip
I stop at one of my bank branches to deposit the check I received > deductible trip
I stop at the post office to buy stamps > deductible trip
I stop at my mail box to pick-up mail > deductible trip
I return to my home office > deductible trip
From my day-to-day from the schedule above, are these trip examples calculated deductions correctly?
I know I do need more help to do this properly, not to mention keeping proper books. Thanks again for your excellent assistance!
Sorry for the misunderstanding. In the scenario provided above, your first trip to the university would be a non-deductible commuting cost. The rest I would feel comfortable deducting save for the trip from the PO to your home, which would be the return leg of your commute. A bit unorthodox, as the return trip home would not necessarily = the outbound trip to your job, but I would be ok handling it on a tax return in that sequence.
Correction – trip from your mail box to your home w/b the return leg, I misread.
Good point about both jobs being employee jobs and the 2% floor. You’d probably be better off trying to get your employer to pay you some kind of mileage bonus.
Actually, a mileage reimbursement (via an “accountable plan”) would be more advantageous than a mileage bonus.
~The reimbursement via the accountable plan is not taxable as it is to pay you back for expenses. You do, however, have to submit proof of expenditure (mileage log, receipts, etc.)
~The mileage bonus is taxable income and does not require proof of expenditure.
See bit.ly/2bYna62
Excellent point. I suppose when I think about it, a reimbursement was what I meant. I’m not sure I was even aware that a mileage bonus was possible.
It’s actually not called a mileage “bonus” but a mileage “allowance”. Same thing and fully reportable as taxable income. As an employee, you then have to deduct your business miles on schedule A, subject to the 2% haircut. Good point to consider negotiating when you are hammering out an agreement.
Yes, I was counting the last outbound legs because when I return to home base I have to wrap-up my day, usually with legal write-ups and answering emails I didn’t get a chance to during the day. When you factor in trips for hearings and filings, I never have enough hours in a workday to process all of the documentation build-up. Work even creeps in during the weekends when my workload is packed.
I was also counting my trips to the college because when I arrive there, I am usually early to field client calls, planned phone meetings and emails all from my school office location. It’s after I’ve taken care of that workload that I focus on my classes and school work. I treat the first half as a office space for my practice, except no work mail goes there nor do I have face-to-face meetings with clients, unless I they are from my school.
I’m sad that adding any type of W-2 employment robs you of the chance to deduct daily mileage from one’s profession!
It’s funny, I got my first office because it was easier for clients to come near the courthouse and I also use it to prep before court. When I moved to a neighboring town, I kept my first office and opened a second to have a business address to market and use for meetings locally. I first got my mail box street address for my mail before I expanded to a real office, then I had to keep it because long immigration cases continue to use that address!
..and as you can probably tell, I really need an assistant as well!
Kay – this is a very subjective area and the deduction depends upon specific facts and circumstances. As you have alluded to yourself, a professional who could work with you personally would be (imo) well worth the cost. Good luck!
Ps – yes, if you can afford it, an assistant would be valuable. Possible to employ a child or your DH part-time and set up a SOLO-401k?
Great topic!
I practice medicine and raise cattle. My cattle operation is not a hobby. Most years I make a small profit.
What would you guys say about this scenario?:
Every morning I drive across the road to my cattle farm to make sure all is well. Sometimes it is, sometimes it is not. Either way it is a necessary endeavor. From there, I drive to my medical office (where I am an owner) and see patients. At the end of the day seeing patients, I go back to the farm to make sure all is still well, feed animals, check fences, etc. I then drive back across the road to my home.
Is my mileage from the farm to my office in the morning, then back to the farm from the office in the evening, all deductible?
Excellent post as usual with many thoughtful points, but I find myself getting a little lost. I work as a physician about 40 miles drive away from home (point “B”). And I am thinking about jointly opening with my wife a non medical business (education center) with an office about a mile away from my house (point “A”). Questions:
Since I expect to work a couple of hours a day at the education center and continue daily full time work as a doctor, would it be reasonable (for tax filing) to list my work commute as between home and point A, and to list my business mileage as between point A and point B?
Thank you.
You don’t get to choose. Your commute is between your home and your business. With 2 businesses, you would have 2 commutes from your home or a commute from point A to the new business and also a commute from new business to point B. The only business mileage I see is for driving you do for the education center to other places (post office, to pick up supplies, education conventions, etc.)
Hi Johanna and thank you for the advice. Yes, in my scenario I am a business owner of two separate businesses in different industries in different places.
I did notice on this string a comment from you (Sept 22, 2015) that read “You can deduct the cost of driving from your main job to your secondary job (even if self-employed) …”. So would I be correct then in deducting as business mileage my daily travel from my main job (doctor) to the education center job? If so, that would be approximately 7,500 miles/year or $4,125/yr in deductible expense…what do you think? Many thanks for your thoughts.
No, sorry, because I also followed that with “but you cannot deduct the round trip between home and your main job.” So, iow, you must first subtract the round-trip mileage.
When the rule works is when you have to drive further than the round trip to go to the secondary job, i.e. you are driving beyond the round trip.
Thank you for the very informative blog and posts!
I have a solo practice as a nephrologist. However, I do not have a dedicated office where I see patients. Instead, I go to a different primary care office every day, where I do nephrology consults (I pay them a flat rate to use their office for a 4-hour session). After seeing patients in these offices, I return to my home office where I spend another 3 to 4 hours to complete my EMR charting, refill prescriptions, follow-up lab results, complete consult reports, return patients’ phone calls, etc. On 2 days of the week, on my way home I stop at a dialysis unit to round on patients. I have 2 questions:
1. Can I deduct my mileage from my home office to the office where I see patients, as well as the return trip?
2. Can I deduct my home office expenses? (last year my CPA said I should not, since I pay the primary care office a fee to use their office space, then that is considered my “office” for the day).
1. As long as you do work there in the morning too then I think that’s legit.
2. If you use the area regularly and exclusively for your business, then yes.
This is an interesting situation. Since you do not have a dedicated office with your own office equipment, storage, etc. and you DO at your home, I would be willing to deduct the mileage. That is not to say it would absolutely stand up to an audit, but I believe it would have a good probability of doing so.
Given the above then, yes, I would deduct the home office. However, it is your CPA that must be comfortable since s/he is signing the return. Without the home office, however, you can’t deduct the mileage.