A new video outlining three simple steps to understanding tax deductions for long distance business commuting.
Text of Tax deductions for commuting expenses
1. S OLUTIONS + P E RSPE CTIVE
2. YOUR TAX HOME Your Main Home, where you sleep at night, may not be considered your Tax Home. S OLUTIONS + P E RSPE CTIVE 3. YOUR TAX HOME Tax Home Definition: Generally your normal place of business, where you report for work each day. IF: You do not have a main work place due to the nature of your business THEN: Your tax home is where you regularly live S OLUTIONS + P E RSPE CTIVE 4. IF: You commute long distances for work. SIGNIFICANCE OF YOUR TAX HOME S OLUTIONS + P E RSPE CTIVE THEN: Commuting expenses are not tax deductible, This is true no matter how far your regular work place is from your home. This is true even if you work during your commute. 5. #1: Commute via train from main home to regular work location. S OLUTIONS + P E RSPE CTIVE 6. EVEN IF: While on train, you make calls, read reports, or respond to emails... #1: COMMUTE VIA TRAIN FROM MAIN HOME TO REGULAR WORK LOCATION S OLUTIONS + P E RSPE CTIVE EVEN IF: You stay in hotel or apartment several days a week to be closer to main work location. THEN: Cost of the train is a non- tax deductible commuting expense. THEN: It is still considered a non-deductible expense because your long distance work location is considered your tax home. THEN: You cannot deduct the cost of meals and lodging while at your tax home. 7. BUT IF: You commute to a TEMPORARY work location, like a clients office THEN: That same train ride becomes deductible. #1: COMMUTE VIA TRAIN FROM MAIN HOME TO REGULAR WORK LOCATION S OLUTIONS + P E RSPE CTIVE It is the commute between your main home and your tax home that is expressly prohibited as an expense. 8. #2: San Francisco is main home, but take a permanent job in Los Angeles. Choose not to move family from San Francisco to Los Angeles. S OLUTIONS + P E RSPE CTIVE 9. IF: You commute to the L.A. work location each week and get apartment near main work location. THEN: The commuting expense, cost of meals and cost of lodging are not deductible even though you are away from your main family home. #2: SF IS MAIN HOME, BUT TAKE A PERMANENT JOB IN LA. DO NOT MOVE FAMILY FROM SF TO L A. S OLUTIONS + P E RSPE CTIVE Since this is a permanent job, with a main work location in Los Angeles Los Angeles is now considered your tax home. 10. IF: You commute to a temporary work location THEN: Your tax home changes Temporary work location is a job or project expected to last for one year or less #2: SF IS MAIN HOME, BUT TAKE A PERMANENT JOB IN LA. DO NOT MOVE FAMILY FROM SF TO L A. S OLUTIONS + P E RSPE CTIVE IF: Your tax home does not change THEN: Main office is tax home IF: No main office THEN: Your tax home is regular residence 11. #3: Same facts as in example 2, except that the job in Los Angeles is temporary. S OLUTIONS + P E RSPE CTIVE 12. This position is expected to last only 8 months #3: SAME FACTS AS IN EXAMPLE 2, EXCEPT THAT THE JOB IN LOS ANGELES IS TEMPORARY. S OLUTIONS + P E RSPE CTIVE Since this meets the one year or less requirement of a temporary work location, your tax home is not considered to have changed to Los Angeles. 13. The commuting expense from San Francisco to Los Angeles, and the meals and lodging, would be tax deductible. #3: SAME FACTS AS IN EXAMPLE 2, EXCEPT THAT THE JOB IN LOS ANGELES IS TEMPORARY. S OLUTIONS + P E RSPE CTIVE 14. Speak to your tax professional for guidance BEFORE YOU TAKE THAT JOB. S OLUTIONS + P E RSPE CTIVE 15. S OLUTIONS + P E RSPE CTIVE G U M B I N E R S A V E T T I N C . 1 7 2 5 C L O V E R F I E L D B L V D . S A N T A M O N I C A , C A 9 0 4 0 4 3 1 0 - 8 2 8 - 9 7 9 8 G S C P A . C O M