Many self-employed writers, authors, illustrators, researchers, and literary agents have questions regarding the tax deductibility of their local transportation expenses. This post will introduce the concept of your tax home and how it affects your deductible local transportation expenses.
Generally, your “tax home” is your regular place of business, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located. If you have more than one regular place of business, your tax home is your main place of business (considering total time spent in each place; level of business activity).
This post will take the viewpoint that most of you work from your home office or rent a local office near your residence. If you have a home office and that is your only business location, your residence is your “tax home.” If you rent office space and it is your regular place of business, the rental office is your “tax home.” So, if you rent office space, the drive from your residence to your office would not be considered deductible business mileage (that falls under nondeductible commuting mileage); however, once you reach the office, any business appointments or errands from there and back would be deductible business mileage. If your business is located only in your home, then deductible mileage would begin as you pull out of your driveway!
For 2012, each business mile, using the standard mileage allowance, is worth 55.5 cents (beginning in 2013, this will be 56.5 cents). You need to maintain a written mileage record and record the “business purpose” for the mileage (see my previous post “Standard Mileage Allowance” for details).
Any tolls and parking fees, incurred as part of your business activity, are deductible on top of the standard mileage allowance.