There are several professions that require commuting for business purposes. For example, a salesperson or technician adds, on average, a hundred miles to their odometer each week. While many of these professionals enjoy the advantages of mileage tax deductions, some are confused on what constitutes a tax write-off. What about your commute to and from work? Is that time also tax deductible?
While you might think of your car as a portable office, there are IRS commuting rules that prevent drivers from deducting every assumed business expense. If you frequently take or make business calls from your car during your commute, here are important things you should know:
Are business calls deductible?
For employees who commute to and from an office or temporary work location, a business call is not considered tax deductible. In fact, any work completed between home and the time you arrive at your office is not eligible as a tax write-off. Even though you might assume your work day begins the moment you take or make a business call, the IRS commuting rules specify otherwise. Time spent commuting is never tax deductible.
What IRS commuting rules apply?
The IRS defines commuting as the transportation between your home and regular place of work. From the time you clock in at a designated work location, that’s when your work day officially begins. To clarify, any voluntary business calls taken while on your way to work will not be counted as tax deductible. There is one exception to this rule that is worth mentioning. For small business owners that operate a work-from-home business, there are ways around the IRS commuting rule.
What business expenses are fully deductible?
Although business calls are not tax deductible, there are other business expenses to take into account. This is particularly the case if you operate a small business or startup company. Beyond automatic mileage tracking, here are the top small business tax deductions for professionals to consider:
- Auto expenses
- Work-related travel
- Office supplies
- Insurance
- Rent on equipment or machinery
- Home office expenses
If you’re self-employed, you can claim the business use of your phone as a tax deduction as well. In other words, the use of your personal cell phone or secondary phone for business purposes is a legitimate tax deduction. For the IRS to approve this type of business expense, you must maintain an itemized bill to distinguish the difference between personal and work calls. It’s important to note, the IRS commuting rules still apply.
How much of your cell phone bill can you deduct?
Self-employed workers can deduct a generous portion of phone expenses depending on the amount of calls that are for business purposes. If 50% of your time on the phone is dedicated toward business calls, you can typically deduct 50% of your cell phone bill (with accurate documentation). Whether you’re tracking mileage or business expenses, it’s always important to keep a detailed record for your tax professional. When tax season arrives, you’ll have everything you need for IRS-approved business write-offs.
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