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Deducting commuting costs is generally not allowed. However, there is an exception carved out by the courts for the required transportation of work equipment and tools. The additional cost - incurred strictly to carry the work implements back and forth - is deductible as an employee business expense. (Self-employed individuals write off the cost as a business expense on Schedule C.) 

Example: Joe works at a construction site in the city. Previously, he took public transportation to work at a round-trip cost of $5 per day. Now, however, he is required to transport equipment back and forth from the job site in a trailer. It costs him $7 a day to drive his car each day and an additional $15 a day for the trailer rental.

According to the IRS, the $15 daily cost of the trailer rental is deductible, but Joe cannot deduct the extra $2 per day cost of driving his car. Reason: Only the additional cost for the same mode of transportation is deductible, even if a less expensive mode of transportation is available.

On the other hand, suppose Joe owns a truck and is able to transport the equipment without renting a trailer. In this case, Joe can deduct the additional cost of $2 per day if he can prove that he would have commuted by public transportation if he was not required to transport the work equipment.

Want more information on ways to reduce your construction business tax bill? Contact us.
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.