Local transportation expenses are often overlooked as a potential income tax deduction. Local transportation expenses are the expenses of getting from one workplace to another when not traveling away from home. They include the cost of transportation by air, rail, bus, taxi, uber, lyft, and the cost of using your car.
The transportation costs for commuting between your family home and a regular workplace are never deductible. However, if you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other. Also, you can deduct expenses you incur in going between your home and a temporary work location if either:
(1) the temporary work location is outside the metropolitan area where you live and normally work; or
(2) you have one or more regular work locations (other than your home) for the same trade or business.
If your home is your principal place of business, you can deduct daily transportation expenses you incur in going between your home and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.
For these purposes, a work location is generally considered temporary if your work there is realistically expected to last (and does in fact last) for one year or less. It is not temporary if your work there is realistically expected to last for more than one year, even if it actually lasts for one year or less. If the work there initially is realistically expected to last for one year or less, but later is realistically expected to last for more than one year, the work location is generally considered temporary until the date the realistic expectation changes and not temporary after that date.
If you are an employee, the Tax Cuts and Jobs Act of 2017 repealed the deduction previously available. For years before 2018 and after 2025, employees can take an itemized deduction for unreimbursed travel expenses relating to their job to the extent the deduction exceeds 2 percent of the taxpayers adjusted gross income. However, for years 2018 – 2025, no such deduction is available. you are engaged in the business of being an employee and expenses that are essential to the continuation of your employment are deductible for income tax purposes. Thus, unreimbursed local transportation expenses you incur in your capacity as an employee are deductible under the rules described above. However, your unreimbursed employee business expenses, plus certain other miscellaneous expenses, are deductible only to the extent that, in the aggregate, they exceed 2 percent of your adjusted gross income.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
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Palm Desert, CA 92260
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