Yikes... commuting questions. The commuting rules are pretty complex. Here's a brief rundown of the tax rules and what qualifies as allowable deductions.

Expenses incurred in travel between your home and one or more regular places of business are considered to be personal commuting expenses and are NOT deductible. The distance that a person must travel to work generally has no bearing on the non-deductibility of commuting expenses.

For example, the U.S. Tax Court has ruled that the expense of getting to work is non-deductible even if the commute is more than 200 miles and an overnight stay is involved. Although a taxpayer may deduct travel expenses incurred while away from home on business, this does NOT apply to the expense of commuting between home and the taxpayer's primary place of business.

However, for many years the IRS has allowed taxpayers to deduct commuting expenses to a temporary job location outside of the metropolitan area where the taxpayer lives and normally works.

In addition, in 1990 the IRS issued RevRul 90-23, allowing taxpayers with one or more regular places of business a deduction for commuting expenses incurred in traveling between the taxpayer's residence and a temporary work location, regardless of the distance traveled. A temporary place of business was defined as any location where the taxpayer worked on an irregular or short-term basis (generally a matter of days or weeks). No commuting deduction was allowed when the taxpayer's assignment was either indefinite or permanent, nor if the taxpayer had no "regular" place of employment.

Then Mr. Walker came along and added a wrinkle to the rule.

In the Walker case, the court ruled that a taxpayer's home office could qualify as a "regular" place of business under RevRul 90-23, even if the office did not qualify as the "principal" place of business for a home office deduction. Walker, a self-employed logger who worked about 7 hours a week in his home office, deducted his commuting costs from home to various temporary job sites in a forest where he did the logging. Although his home office did NOT qualify for a home office deduction, it was a regular place of business. Therefore, the court allowed the deduction. Oops!

In response to the court's decision, the IRS employed the "golden rule" (defined as: them with the gold makes the rules), and issued RevRul 94-47, placing new restrictions on deductible commuting expenses. The current rule reads like this:

Travel expenses between home and a temporary work location within the taxpayer's metropolitan area are NOT deductible unless one of the following two criteria are met:

1. A taxpayer who has one or more regular work locations away from his residence may deduct daily commuting expenses between the residence and a temporary work location, regardless of the distance. Additionally, after work is completed at the temporary location, travel from the temporary location to the regular work location is also deductible.

2. If a taxpayer's home office qualifies for a deduction, then transportation expenses are deductible regardless of distance or whether the other work location is regular or temporary.

Got that? To clarify it a little, let's look at an example of Rule #1:

A taxpayer has one regular place of business and commutes daily from home to work. Occasionally, the taxpayer stops by a client's office (a temporary work location) in the morning to conduct business. The client's office is located about half way to the taxpayer's regular place of business. All travel expenses would be deductible on the mornings the taxpayer stops at the client's office -- both the travel from home to the temporary work location, and the travel from the temporary work location to the regular place of business. The travel from work to home in the evening would be non-deductible commuting.

Remember that this is just a brief summary of the commuting rules, and there are some exceptions to the general rules noted above. Just be very careful any time you try to make your commuting costs a deductible business expense.

- Article 04

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