The IRS Commuter Rule You Need to Know

September 14, 2018
By

fringe benefits and the IRS commuter rule

The IRS Commuter rule provides certain opportunities for employees to earn deductions from work-related driving. However, there are fairly strict rules regarding what can actually be deducted – and what can’t. What else qualifies for an official deduction under the IRS commuter rule, you ask? We’ll answer all those questions for you below!

What is the IRS Commuter Rule?

The IRS Commuter Rule is defined as “transportation between your home and your main or regular place of work.” Your workplace is deemed “regular” if you have worked there for a year, or expect to. Contrary to what many people believe, these types of commutes are considered personal. This means that they aren’t eligible for deductions according to IRS standards.

When to Deduct

Let’s take a look at the circumstances where it is acceptable to get a deduction on your mileage expenses. This kind of travel always falls into the business category, meaning that is purely for work and unrelated to personal travel. It can, however, overlap with certain personal circumstances, so it’s important to understand the specific distinctions and how they affect you.

Business drives that are eligible for the IRS commuter rule include:

  • When an employee must travel to another location that isn’t work or home, as required by their employer
  • When a taxpayer travels between home and a temporary job, that they expect to have for less than one year
  • When a taxpayer travels between their main job and their second job
  • When a taxpayer travels between their temporary work locations and their second job
  • When a taxpayer drives from his or her home office (if its deductible) to their main job, as this counts as driving between workplaces

When You Can’t Deduct

So, we’ve covered the fact that driving between work and home is considered a personal commute, and it isn’t a deductible expense. But what other commuting circumstances aren’t deductible, according to the IRS commuter rule? This question can be confusing because there is a common misconception that employees can receive deductions on drives that are even partially related to business.

To clear up the confusion, we’re here to debunk the common misconceptions. These are three scenarios that are not deductible:

  • If you’re driving to your second job from home, on a day off from your main job.
  • If you’re driving from home to work but are doing so to carry supplies, products, etc.
  • If you’re driving from work to home in a company car with advertising or branding

Another thing to keep in mind is that many companies offer reimbursements for mileage expenses. If your company offers reimbursement to employees for commutes, they become unqualified for deductions. This is true even if the trip is otherwise eligible for a deduction.

If you do fall into a category where your business drives are deductible, be sure to record your miles accurately. The IRS commuter rule states clearly that it can easily reject your mileage log if it isn’t recorded right, so be sure to be diligent about this step if you’d like to get your deduction without any hang-ups.

About

As a professional copywriter, Dan produces strategic marketing content for startups, digital agencies, and established brands. He helps organizations tell stories, achieve online presence, and builds brands that communicate with their customers. Dan is also a regular contributor to Forbes. He started writing after his first professional role as a health promotions coordinator for a local family physicians office.

Category: HR Tips & Trends, Compliance


You might also like