Deducting mileage for your commute is not allowed by the IRS -- unless you know the little commuting mileage tax deduction trick I'm about to reveal.
The IRS rule of the non-deductibility of commuting mileage is painfully true for the employee who fights rush hour traffic every day, twice a
day, for 5 to 10 hours a week.
All that hassle, and what does he have to show for it? Just gas money down the drain, not to mention the wear and tear on both his vehicle and his stress-o-meter. But what is the secret to income tax deductible mileage?
Commuting Mileage Tax Deduction
The IRS mileage allowance can include virtually all your
commuting mileage expense, allowing your to take a mileage deduction for the
miles you log from your home to the office or other place of business, if you
meet the following two criteria:
- You are a small business owner or self-employed person, and
- You have two offices or work locations: one outside the home (Office #1) and one inside the home (Office #2).
Having two offices is very common for today's self-employed professional. The store owner, the shopkeeper, the salesman, the plumber, the consultant -- all these folks are typically self-employed and have two offices: one where they meet with the public (Office #1), the other at home, where they get their paperwork done (Office #2).
The Commuting Mileage Tax Deduction Secret!
Here's how this small business tax tip works:
Every day you get up and "go to work." But you don't get in the car and drive to Office #1 right away. If you did that, even as a self-employed person, you would be racking up non-deductible commuting mileage expenses, just like the employee.
Instead, you grab a cup of coffee and head to Office #2 first, which takes all of 30 seconds.
After working in Office #2 for awhile, then you hop in the car and head to Office #1, where you work for the bulk of the day.
Then, when you're done at Office #1, you get back in the car and start deducting mileage for your trip "home" -- except when you get inside your house, you don't head for the living room, you go straight to Office #2, where you finish up your daily routine with a few final minutes of paperwork.
What have you just done?
You daily round-trip "commute" is now a business mileage deduction, due to a IRS mileage reimbursement loophole that says:
Any miles driven between two business locations qualify as a business mileage deductiom.
The fact that one of those two locations just happens to be your Home Office is fine and dandy with the IRS.
By following this route each day, you can save hundreds, even thousands of dollars through IRS mileage reimbursement.
The proof is in the pudding:
Your round-trip "commute" is 20 miles per day.
20 miles X 5 days = 100 miles per week.
100 miles per week X 50 weeks = 5,000 miles per year.
5,000 business miles X .36 cents = $1,800 mileage deduction
So, you just got yourself a nice $1,800 mileage deduction -- a mileage deduction that you've probably been entitled to for years but didn't know it.
$1,800 mileage deduction X 32% income tax rate = $576 in actual tax savings (27% federal income tax + 5% state income tax)
Five-hundred and seventy-six bucks... every year...
... Hmm, mmm, good! Now that's a tasty little morsel!