Merry Christmas! The Christmas holiday falls on my usual publishing date, so as I usually do on holiday weeks, I’m re-publishing popular stories from the archives.
This story about deducting business miles driven from a home office was originally published on December 21, 2011, and has remained popular 2 years later.
(Note: see the comment section for an important addition to the conversation on this topic from a fellow tax pro.)
Originally published December 21, 2011
If you run a business out of your home, can you deduct mileage? Unfortunately the answer isn’t always clear.
IRS publications say that you can deduct mileage driven from your home to business-related stops if your home is your principal place of business. Defining “principal place of business” is the tricky part.
To qualify as a principal place of business, your home office must be usedregularly and exclusively as your principal place of business. Here is how IRS Publication 587 defines principal place of business:
Your home office will qualify as your principal place of business if you meet the following requirements.
- You use it exclusively and regularly for administrative or management activities of your trade or business.
- You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.
Administrative activities include things like bookkeeping, invoicing clients, ordering supplies, etc. If you have a portion of your home that is used regularlyand exclusively for those purposes, then your home qualifies as your principal place of business and you can deduct mileage from your home to a business stop.
Note that the word “exclusive” means 100% business usage. Even if you are home-based and do everything for your business out of your home, you don’t qualify for deducting mileage (or for the home-office deduction) unless you have an area that is used 100% for business purposes and 0% for personal purposes.
There are still ways a home-based business owner can deduct at least some of their business mileage, even if their home office doesn’t meet the regular and exclusive test. Here’s an example:
- Drive from home to the post office to check the business PO box (mileage not deductible).
- Drive from the post office to another business stop (mileage is deductible).