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Publication 17
taxmap/pub17/p17-144.htm#en_us_publink1000173797

Transportation Expenses(p182)

rule
This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses. These expenses include the cost of transportation by air, rail, bus, taxi, etc., and the cost of driving and maintaining your car.
Transportation expenses include the ordinary and necessary costs of all of the following. Transportation expenses do not include expenses you have while traveling away from home overnight. Those expenses are travel expenses, discussed earlier. However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. See Car Expenses, later.
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Illustration of transportation expenses.(p182)

rule
Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. You may want to refer to it when deciding whether you can deduct your transportation expenses. Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office.
taxmap/pub17/p17-144.htm#en_us_publink1000173800

Temporary work location.(p182)

rule
If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance.
If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise.
If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year.
If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. It will not be treated as temporary after the date you determine it will last more than 1 year.
If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. You may have deductible travel expenses as discussed earlier in this chapter.
taxmap/pub17/p17-144.htm#en_us_publink1000173801

No regular place of work.(p183)

rule
If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area.
Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area.
You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses.
taxmap/pub17/p17-144.htm#en_us_publink1000173802

Two places of work.(p183)

rule
If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second.
Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. You cannot deduct them.
taxmap/pub17/p17-144.htm#en_us_publink1000173803
Armed Forces reservists.(p183)
A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work, earlier.
You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. In this case, your transportation generally is a nondeductible commuting expense. However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work.
If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses.
If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. These expenses are discussed earlier under Travel Expenses.
If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later.
taxmap/pub17/p17-144.htm#en_us_publink1000173807

Commuting expenses.(p183)

rule
You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip.
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Example.(p183)

You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities do not change the trip from personal to business. You cannot deduct your commuting expenses.
taxmap/pub17/p17-144.htm#en_us_publink1000173809
Parking fees.(p183)
Fees you pay to park your car at your place of business are nondeductible commuting expenses. You can, however, deduct business-related parking fees when visiting a customer or client.
taxmap/pub17/p17-144.htm#en_us_publink1000173810
Advertising display on car.(p183)
Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses.
taxmap/pub17/p17-144.htm#en_us_publink1000173811
Car pools.(p183)
You cannot deduct the cost of using your car in a nonprofit car pool. Do not include payments you receive from the passengers in your income. These payments are considered reimbursements of your expenses. However, if you operate a car pool for a profit, you must include payments from passengers in your income. You can then deduct your car expenses (using the rules in this chapter).
taxmap/pub17/p17-144.htm#en_us_publink1000173812
Hauling tools or instruments.(p183)
Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car).
taxmap/pub17/p17-144.htm#en_us_publink1000173813
Union members' trips from a union hall.(p183)
If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located.
taxmap/pub17/p17-144.htm#en_us_publink1000173814

Office in the home.(p183)

rule
If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. (See chapter 28 for information on determining if your home office qualifies as a principal place of business.)
taxmap/pub17/p17-144.htm#en_us_publink1000173816

Figure 26-B. When Are Transportation Expenses Deductible?

Most employees and self-employed persons can use this chart. (Do not use this chart if your home is your principal place of business. See Office in the home.)

taxmap/pub17/p17-144.htm#en_us_publink1000173817
taxmap/pub17/p17-144.htm#en_us_publink1000173818

Examples of deductible transportation.(p183)

rule
The following examples show when you can deduct transportation expenses based on the location of your work and your home.
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Example 1.(p183)

You regularly work in an office in the city where you live. Your employer sends you to a 1-week training session at a different office in the same city. You travel directly from your home to the training location and return each day. You can deduct the cost of your daily round-trip transportation between your home and the training location.
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Example 2.(p183)

Your principal place of business is in your home. You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business.
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Example 3.(p183)

You have no regular office, and you do not have an office in your home. In this case, the location of your first business contact inside the metropolitan area is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible.
taxmap/pub17/p17-144.htm#en_us_publink1000173822

Car Expenses(p183)

rule
If you use your car for business purposes, you may be able to deduct car expenses. You generally can use one of the two following methods to figure your deductible expenses.
If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. See Leasing a car under Actual Car Expenses, later.
In this chapter, "car" includes a van, pickup, or panel truck.
taxmap/pub17/p17-144.htm#en_us_publink1000173826

Rural mail carriers.(p183)

rule
If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income.
If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). You must complete Form 2106 and attach it to your Form 1040.
A "qualified reimbursement" is the reimbursement you receive that meets both of the following conditions. See your employer for information on your reimbursement.
EIC
If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate.
taxmap/pub17/p17-144.htm#en_us_publink1000173828

Standard Mileage Rate(p184)

rule
You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. For 2012, the standard mileage rate for business use is 551/2 cents per mile.
EIC
If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later.
You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. See Reimbursements under How To Report, later.
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Choosing the standard mileage rate.(p184)

rule
If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then in later years, you can choose to use either the standard mileage rate or actual expenses.
If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period.
You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. You cannot revoke the choice. However, in a later year, you can switch from the standard mileage rate to the actual expenses method. If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation.
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Example.(p184)

Larry is an employee who occasionally uses his own car for business purposes. He purchased the car in 2010, but he did not claim any unreimbursed employee expenses on his 2010 tax return. Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2012 to claim unreimbursed employee business expenses.
For more information about depreciation included in the standard mileage rate, see the exception in Methods of depreciation under Depreciation Deduction in chapter 4 of Publication 463.
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Standard mileage rate not allowed.(p184)

rule
You cannot use the standard mileage rate if you:
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Five or more cars.(p184)
If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. However, you may be able to deduct your actual expenses for operating each of the cars in your business. See Actual Car Expenses in chapter 4 of Publication 463 for information on how to figure your deduction.
You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business.
Note.You can elect to use the standard mileage rate if you used a car for hire (such as a taxi).

taxmap/pub17/p17-144.htm#en_us_publink1000173836

Parking fees and tolls.(p184)

rule
In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses.)
taxmap/pub17/p17-144.htm#en_us_publink1000173837

Actual Car Expenses(p185)

rule
If you do not use the standard mileage rate, you may be able to deduct your actual car expenses.
Deposit
If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction.

Actual car expenses include:
Depreciation
Licenses
Lease
 payments
Registration
 fees
GasInsuranceRepairs
OilGarage rentTires
TollsParking fees 
taxmap/pub17/p17-144.htm#en_us_publink1000173840

Business and personal use.(p185)

rule
If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.
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Example.(p185)

You are a contractor and drive your car 20,000 miles during the year: 12,000 miles for business use and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense.
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Interest on car loans.(p185)

rule
If you are an employee, you cannot deduct any interest paid on a car loan. This interest is treated as personal interest and is not deductible. However, if you are self-employed and use your car in that business, see chapter 4 of Publication 535.
Deposit
If you use a home equity loan to purchase your car, you may be able to deduct the interest. See chapter 23 for more information.
taxmap/pub17/p17-144.htm#en_us_publink1000173845

Taxes paid on your car.(p185)

rule
If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Enter the amount paid on line 7 of Schedule A (Form 1040). (See chapter 22 for more information on taxes.) If you are not an employee, see your form instructions for information on how to deduct personal property taxes paid on your car.
taxmap/pub17/p17-144.htm#en_us_publink1000173847
Sales taxes.(p185)
Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later.
EIC
The deduction for state and local general sales taxes in lieu of state and local income taxes expired at the end of 2011. At the time this publication went to print, Congress had not enacted legislation on expiring provisions. For additional information, go to www.irs.gov/pub17.
taxmap/pub17/p17-144.htm#en_us_publink1000173848

Fines and collateral.(p185)

rule
You cannot deduct fines you pay and collateral you forfeited for traffic violations.
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Depreciation and section 179 deductions.(p185)

rule
Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179), special depreciation allowance, and depreciation deductions. Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. The section 179 deduction, special depreciation allowance, and the depreciation deduction are discussed in more detail in chapter 4 of Publication 463.
Generally, there are limits on these deductions. Special rules apply if you use your car 50% or less in your work or business.
taxmap/pub17/p17-144.htm#en_us_publink1000173850

Leasing a car.(p185)

rule
If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible car expense.
taxmap/pub17/p17-144.htm#en_us_publink1000173851
Deductible payments.(p185)
If you choose to use actual expenses, you can deduct the part of each lease payment that is for the use of the vehicle in your business. You cannot deduct any part of a lease payment that is for personal use of the vehicle, such as commuting.
You must spread any advance payments over the entire lease period. You cannot deduct any payments you make to buy a vehicle, even if the payments are called lease payments.
If you lease a car, truck, or van for 30 days or more, you may have to reduce your lease payment deduction by an "inclusion amount." For information on reporting lease inclusion amounts, see Leasing a Car in chapter 4 of Publication 463.
taxmap/pub17/p17-144.htm#en_us_publink1000173852

Sale, Trade-In, or Other Disposition(p185)

rule
If you sell, trade in, or otherwise dispose of your car, you may have a taxable gain or a deductible loss. This is true whether you used the standard mileage rate or actual car expenses to deduct the business use of your car. Publication 544 has information on sales of property used in a trade or business, and details on how to report the disposition.