In this week's Ask the Tax Expert, a mystery shopper has questions about deducting mileage when you stop at home. In particular, she's curious about which drives related to your home can you write off. We also cover which drives are considered your commute.
Can You Write Off Drives When You Stop By Your House?
Q. Last year I worked as an independent contractor "mystery shopper" driving to restaurants and stores, making purchases, and writing evaluations. If I drove from my home to a job and back home, can that be used for a mileage deduction (Home ->Job ->Home)? Can I deduct the mileage if I drove from home to multiple jobs (Home -> Job 1 -> Job 2 -> Home)?
-Liane J., Tacoma, Washington
A. You can always deduct the cost of driving from one work location to another. Thus, you can deduct the cost of driving from one store to another store where you do mystery shopping.
Whether you can deduct the cost of driving from home to your first job of the day, and then driving home from your last job of the day, depends on whether you have a tax deductible home office that qualifies as a principal place of business for you.
If you don't have a tax deductible home office, you may not deduct the cost of driving from home to work and then driving from work back home. This is considered personal commuting, which is ordinarily not tax deductible. However, there is one exception to this rule. You can deduct the cost of driving from home to temporary jobs outside of your metropolitan area. Generally, this includes the area within city limits and the suburbs that are considered part of that metropolitan area.
Yet, there is one exception to this rule. You can deduct the cost of driving from home to temporary jobs outside of your metropolitan area. Generally, this includes the area within city limits and the suburbs that are considered part of that metropolitan area.
If you have a tax deductible home office that qualifies as the main place of business for your mystery shopping activity, the commuting rule doesn't apply. You may deduct travel from home to your first job and to home after your last job of the day.
To have a deductible home office, you must have a place in your home you use exclusively and regularly for your mystery shopping business. It can be a whole room or part of a room.
Such a home office will qualify as a principal place of business if (1) it is the place where you earn most of your income, or (2) you perform administrative work there.
Since you earn your mystery shopping income outside your home, you must qualify under the administrative work test. You must satisfy two requirements:
- You use your home office to conduct administrative or management activities for your business, and
- There is no other fixed location where you conduct substantial administrative or management activities.
