When your clients use a vehicle for business, they may be able to deduct their mileage, but never as simple as entering a number and moving on. The IRS requires detailed records to support those deductions, especially if the return is audited. Whether your client uses the standard mileage rate or the actual expense method, you need to understand how to determine business use, meet substantiation requirements and recognize when luxury auto limits apply.
Below, you’ll find a few of the top questions and answers from a recent webinar on the topic. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: If a taxpayer maintains a qualifying home office, is travel to a separate business location considered deductible business mileage?
A: Yes. If the home office qualifies as the taxpayer’s principal place of business under §280A(c)(1), travel from the residence to other business locations is deductible. This includes trips to client sites, suppliers or temporary work locations.
Q: Are travel expenses to multiple client locations deductible under the business use rules for a sole proprietor operating from a home office?
A: Yes. Such travel qualifies as business mileage if the home office is the principal place of business under §280A(c). These trips are considered business-related per IRS Pub. 463 and are deductible.
Q: Does an office physically attached to a taxpayer’s residence, with a dedicated client entrance and no access to the personal living space, qualify as a home office for tax purposes?
A: Likely yes, provided the space is used exclusively and regularly for business and meets the principal place of business test under §280A(c)(1). These characteristics support a qualifying home office deduction.
Q: Is mileage between two separate self-employment jobs deductible as business mileage for a self-employed taxpayer?
A: Yes. Per IRS Pub. 463 (Travel, Gift, and Car Expenses) and guidance in §162, travel between two business locations is generally deductible. However, commuting between a residence and the first/last job of the day is not.
To learn more about substantiating vehicle business use expenses, watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.