Q: Tax Playa, I'm a contractor with a single payer. Can I deduct travel to business locations from my home, or is this considered commuting?
Mike
A: Mike, that depends greatly on whether or not you have a qualified home office. If you do, then you are technically travelling from your home office to work locations. If you don't, then your first home to business location trip is considered personal, non-deductible commuting...
Commuting is considered a personal expense and is not deductible to taxpayers. It is generally defined as the first trip of the day from one's main home to one's first business location, as well as the last trip of the day from one's business
An opportunity arises when one's first business location is in the main home itself (i.e. a home office). Having a home office has its own qualification rules which are described in an earlier posting.
If you have a qualifying home office, your "commute" is the walk from your breakfast table to the office. Anything after that is considered business travel, since you have made your first trip from your main home to a business location. When you get home at night, it's to your home office. From there you "commute" back to your main home. The long and short of it is that your entire travel budget (car expenses, local transportation, etc.) becomes deductible as business travel when it was otherwise non-deductible commuting.
Be very careful, though, to avoid the most common traps associated with home office deduction eligibility, including:
--failing to use the area exclusively for business;
--failing to regularly-conduct business there (at least your administrative functions must be done from the home office location);
--failing to use the office in a trade or business activity;
--failing to claim depreciation which must later be recaptured later;
--failing to keep adequate records of utilities, insurance, rent paid, management fees, etc.
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