Deductible Transportation Expenses for AGI – Paul Gaulkin CPA

Car on top of pile of coinsTransportation expenses are defined for tax purposes as the actual cost of transporting an individual from one location to another when the individual is not travelling away from home overnight for business. Normally, transportation expenses will include airline fares, taxi fares, automobile expenses, parking fees, tolls, and other expenses of this nature.

Self Employed Transportation

Transportation expenses of a self employed taxpayer are deductible for adjusted gross income as a trade or business expense. Unreimbursed employee transportation expenses are deductible from adjusted gross income as miscellaneous itemized deductions subject to the two percent of adjusted gross income limitation.

Employee Transportation

In order for transportation expenses to be deductible by an employee, the expenses must be paid or incurred in connection with services performed as an employee. Expenses that are incurred by an employee going from home to work and back are considered nondeductible and will not be allowed by the IRS. It is important to note that the expenses are nondeductible regardless of the length the taxpayer must travel to go to and from work each day.

Temporary Work Assignment

If a taxpayer has a temporary work assignment beyond the general work area, and the taxpayer chooses to return home each night, the transportation expenses related to the round trip would be deductible if not reimbursed by the employer. Any work assignment that is in excess of one year will not be considered temporary and related transportation costs are nondeductible commuting expenses.

Driving to Second Job

The cost of going from a taxpayer’s first job to their second job is fully deductible. It is important to note that driving home from the second job is not deductible. The only cost that is deductible is the transportation cost of getting from the first job to the second job.

Additional Transportation Expenses

Where an employee incurs additional transportation expenses beyond what would normally be incurred in commuting to work because the employee has to transport heavy and bulky tools to work, these additional expenses are also deductible transportation expenses.

Of course this is open to interpretation and should be carefully considered before deducting. One person that views something as heavy may be viewed by another as light and easy to transport.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.

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