In a recent case involving a man who commuted from Ohio to his California-based business, the Tax Court cited a 1946 U.S. Supreme Court opinion that a taxpayer who chooses to live a substantial distance from his place of business gets no exception to this general rule. Furthermore, the living expenses, in addition to the commuting expenses incurred by the taxpayer, are also nondeductible personal expenses.

 

Tax expert Michael Tucker analyzed this case and said this taxpayer was not well counseled, and the transaction was not appropriately identified.

 

"If you look at this as a commutational expense, it is totally disallowed. If you look at it as travel, it may very well be deductible," said Tucker.

 

For instance, had the taxpayer maintained a home office in Ohio, or a second business in Ohio, it may have passed as a travel expense rather than a commute.

 

In general, four exceptions to the commuting expense rule apply. These exceptions, according to a recent segment by SmartPros' CPA Report, include commuting with tools and similar items; commuting between two jobs; commuting between job sites; and commuting to a temporary assignment.

 

Explained Tucker: "If you have heavy tools, if you have ladders and equipment you need to bring with you, then the incremental commutational expenses are deductible. If you go from one job site to a second job site, those are also deductible, but those are by a reason, an exception to the general rule that commutational expenses are personal and non-deductible."

 

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