transportation - Linkenheimer LLP CPAs & Advisors

What Local Transportation Costs Can Your Business Deduct?

You and your small business are likely to incur a variety of local transportation costs each year. There are various tax implications for these expenses.

First, what is “local transportation?” It refers to travel in which you aren’t away from your tax home (the city or general area in which your main place of business is located) long enough to require sleep or rest. Different rules apply if you’re away from your tax home for significantly more than an ordinary workday and you need sleep or rest in order to do your work.

Costs of traveling to your work location

The most important feature of the local transportation rules is that your commuting costs aren’t deductible. In other words, the fare you pay or the miles you drive simply to get to work and home again are personal and not business miles. Therefore, no deduction is available. This is the case even if you work during the commute (for example, via a cell phone, or by performing business-related tasks while on the subway).

An exception applies for commuting to a temporary work location that’s outside of the metropolitan area in which you live and normally work. […]

By Linkenheimer LLP|2022-10-10T20:52:05+00:00October 10th, 2022|business, deduction, travel|0 Comments

Fringe Benefits – Transportation Updates

In years prior to the recently passed Tax Cuts and Jobs Act, Congress encouraged “green”efforts to protect the environment by giving employees tax breaks for carpooling and using mass transit. For employees, the TCJA doesn’t take away the tax-favored status of these commuting benefits (other than bicycle commuting) or the option to pay for them with pre-tax dollars. Instead, starting January 1, 2018 businesses can no longer take a deduction for transportation fringe benefits (including employee parking). This means for both profit and non-profit businesses, the cost of providing these benefits is generally increased by the corporate tax rate (21% as of January 1, 2018).

This poses a dilemma for employers. Either they continue to provide these transportation fringe benefits despite the loss of the business deduction or they discontinue making these benefits available. This will cause businesses to take a careful look at the tax impact/ cost of transportation benefits against the value to their employees (and in turn, the importance of attracting and retaining talent by offering these benefits). It is also possible that local ordinances may have an impact as well:

• San Francisco, California. Businesses with a location in San Francisco (including nonprofit […]

By Linkenheimer LLP|2020-09-03T20:04:42+00:00March 1st, 2018|deduction, New Tax Laws|0 Comments