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Taxpayer takes a $23,000 hit on commuting costs
So … you think your commute is expensive?
The costs of commuting between your home and your place of business are generally considered nondeductible personal expenses. However, in some cases you can deduct travel expenses between your home and a temporary work location, if the temporary work location is outside the metropolitan area where you normally live and work.
A recent Tax Court case addressed a common fact pattern. Kristopher Saunders performed construction services as an employee of Valley Interior Systems in Cincinnati, Ohio. During 2007, he traveled to five temporary work sites. He did not travel to the Valley Interior offices in Cincinnati.
None of the jobs lasted more than a few months. The temporary work sites ranged in distance from 74 to 96 miles from Saunders’ home. Each workday, Saunders drove from his home to the temporary work location, returning home at the end of each day.
For reasons not explained in the case, Valley Interiors did not reimburse the travel costs, which exceeded $23,000. Saunders claimed an itemized deduction for unreimbursed employee business expenses, which was disallowed by the IRS.
The Tax Court noted that it takes a facts-and-circumstances approach in deciding whether a particular work site is unusually distant from the area where the taxpayer lives and normally works. The court found that Saunders” temporary work sites could not be considered outside the Cincinnati metropolitan area.
The court also found that the travel expenses would be deductible if the residence was Saunders’ principal place of business. However, Saunders did not claim that his residence was his principal place of business.
Finally, travel expenses between his residence and a temporary work location may have been deductible if Saunders had shown that he had a regular work location away from his residence. The court found no evidence to establish that Saunders had a regular work location in 2007.
The court concluded that all of Saunders’ travel expenses were nondeductible commuting costs (Kristopher R. Saunders and Jessika R. Saunders v. Commissioner, TC Memo 2012-200, July 17, 2012).
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The technical information here is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS.
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