Each week, our resident small business tax expert, Stephen Fishman, answers your small business tax questions.
Question: If I drive my personal car from my home to an appointment with a client and then to the office, what part of that drive is eligible for the standard mileage rate? My employer says that the total miles of the trip should be added and then the usual commute miles from home to office should be deducted from the trip total. I disagree because the miles are being driven for the purpose of the appointment and are therefore not a commute.
-Alex in North Hollywood, CA
Stephen Fishman: As you know, commuting from home to your office or other regular workplace is ordinarily not deductible. However, there is an exception when you travel between your home and a temporary work location for the same business. A temporary work location is any place where you realistically expect to work less than one year. It can be inside or outside of the metropolitan area where you live. However, if the location is inside your metropolitan area, this exception applies only where you have an outside office or other regular work location away from your home. You have a regular office, so you can deduct travel to temporary work location in or outside your metropolitan area.
A client’s office would certainly qualify as a temporary work location so long as it is truly “temporary.” The IRS says that if you expect to visit, or actually visit, a client’s office (or other work location) less then 35 days during the year, the office will qualify as a temporary work location and your mileage will be deductible. But if you visit this a client for more than 35 days, it will not qualify as a temporary work location and you can’t deduct your mileage. (IRS Chief Counsel Advice 200026025.)
Driving to a temporary work location from home converts the entire trip into a deductible travel expense, so you can deduct all your mileage from home to the client’s office.
Question: I work delivery jobs for Postmates and I have started tracking my mileage. The issue is I need to drive least 27 miles before going “on duty” due to living outside of the Postmates delivery coverage area. Can I deduct these miles? Or am I only allowed to deduct miles while “on duty?”
-Daniel in Woodbridge, VA
Stephen Fishman: Subject to an important exception, you can’t deduct these miles. The general rule is that, if you have no regular office, the location of your first business contact inside your metropolitan area is considered your office for tax purposes. Thus, you can’t deduct the cost of driving from home to your first delivery pick-up of the day because it is considered personal commuting. Nor can you deduct the cost of driving back home after your last delivery of the day. You can deduct driving from one delivery to another during the day. Also, you can deduct the cost of driving from home to make a delivery outside your metropolitan area and back home. Your “metropolitan area” includes the area within the city limits and the suburbs that are considered part of that metropolitan area.
Here’s the exception: The way to avoid this commuting rule is to have a tax deductible home office. Then, driving from home to the first business contact would not be commuting. Likewise for driving from the last contact back home. A driver can have a deductible home office if he regularly uses a space at home exclusively for administrative tasks like bookkeeping and scheduling.