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Automobile Commuting Rules

Auto CommutingThanks to an IRS ruling, you may be able to claim deductions for daily transportation expenses that were treated as nondeductible personal commuting expenses in prior years. The ruling significantly eases the deduction rules for taxpayers who travel between home and temporary job locations. In addition, it gives new write offs to many taxpayers with home offices.

It’s long been the rule that you cannot write off the cost of traveling between home and the office. That’s nondeductible commuting. On the other hand, a taxpayer can deduct the cost of traveling between the office and a temporary work location-a client’s or customer’s office, for example. Now the IRS has liberalized the definition of “temporary.” It is no longer limited to just a matter of days or weeks. If a taxpayer realistically expects a project to last for one year or less, it will be considered “temporary,” and the commuting costs will be deductible.  If a taxpayer realistically expects the work to last for one year or less, but at some point that expectation changes, the commuting costs will be deductible up to that point [Rev. Rul. 99-7].

In addition, starting in 1999, clients can claim deductions for a home office that’s used regularly and exclusively for administrative or management work as long as there no other fixed location for doing the work. For purposes of the home office deduction rules, the administrative home office will be considered the taxpayer’s “principal place of business.”

The IRS says it will incorporate the change into the commuting rules. Thus, taxpayers whose administrative home offices qualify as a principal place of business can write off their travel costs to and from other temporary business locations.


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