How the Home Office Deduction Can Stop the Wasted Cost of Your Commute

Taxpayers don’t get to deduct the costs or mileage of driving to and from work. Those miles are called commuting miles and except in rare circumstances they’re not deductible. However, business owners who have a home office get to define their commute differently. If you have a home office, your commute is the walk from your kitchen into your home office at the start of your day. And your commute from work is the walk from your home office to your living room at the end of the day. What does this mean?

IRS regulations say the drive from your residence to your first stop at the beginning of your day and your drive from your last place of business to your residence are commutting miles and are not deductible. All business mileage in between your first and last business top are deductible. But if your residence is your first place of business then your deductible mileage starts when you leave, continues all day, and stops when you arrive back home.

So, business owners who take the home office deduction get to claim all business miles starting when they leave their home and ending when they return. If those added miles total just 20 miles a day, that’s 5,000 miles a year or over a $2,700 tax deduction!

There are limitations. You must actually have a qualified home office. You cannot deduct rent for an office and claim the home office deduction as a business owner. There are some other requirements as well. However, the benefits can be substantial. Investigate if a home office deduction combined with the additional mileage deduction is a tax strategy that is right for your situation.