Home Businesses Tax Deductions - Mileage -What are you missing!

In this article we'll look at the Tax Deduction you may be
missing, and what it's costing you.

There is a lot misinformation regarding this subject among
Home-Based business owners, and a lack of information
among some tax professionals, it's time to make you aware
of the Tax Laws regarding this deduction!

The source for this information is Internal Revenue Ruling
99-7, as amplified by 1999-5 Internal Revenue Bulletin 4.
These are the sources you'll need, to convince your own tax
pro that this is a valid deduction.

Most tax professionals know that IRS Regs, Section 1.62-2(e)
and 1.262-1(b)(5) state that the costs of commuting between
a taxpayer's residence and their place of business or employment
are non-deductible personal expenses.

However, if they read further......they would see: "However, the
costs of going between one business location and another business
location generally are deductible under Section 162(a), Rev Rul 55-
109, and 1955-1 C. B. 261.

Section 280A(c)(1)(A) explains how a taxpayer may claim a "Home
Office" deduction. (There is a book by Ron Mueller titled "It's How
Much You KEEP, That Counts! Not how much you Make", which
explains this in detail, with authority.) You can get more information
on this great little book here ... Home Business Taxes


In the case of Curphey v. Commissioner [73 T.C. 766 (1980)] the
Tax Court's decision was that such expenses "were deductible
where the home office was a taxpayer's principle place of business."

This is the Statement in the Court's written decision:

"We see no reason why the same (IRS) Rule which states that local
transportation expenses incurred in travel between one business
location and another are deductible, should not be equally applicable
where a taxpayer's principle place of business, with respect to the
activities involved, is in his residence."

Want more "proof?" Here is what IRS Revenue Ruling 94-47 (the
most current statement on the subject) says verbatim:

"If the Taxpayer's residence is the taxpayer's principle place of
business within the meaning of Section 280(a)(1)(A) - i.e., You
Have a Home-Office - the taxpayer May deduct daily transportation
expenses incurred in going between the taxpayer's Residence and
Another work location in the same trade or business, regardless of
distance."

What does "in the same trade or business" mean?

In the Revenue Ruling 99-7 it says, "Where an employee has two
separate employers, Both such positions constitute part of the
employee's trade of business."

What does this mean to You?
How many miles do you drive to your W-2 job? Multiply that number
by 2, to get your round-trip daily commuting distance. Multiply that
number by 5 to get your weekly commuting mileage. Next, multiple
that by 50 weeks, to determine how many 'commuting' miles you
travel in a full year. Finally, multiply that number by $0.585 - the
current per-mile tax deduction for business use of your personal
vehicle.

For example:
Let's say you drive 12 miles to work.
12 miles x 2 = 24 miles per day, roundtrip.
24 miles x 5 days/week = 120 miles per week.
120 miles x 50 weeks/year = 6,000 miles per year.
6,000 miles x $0.585 = $3,510.
$3,510 is The Amount of your new, additional tax deduction!!!

Now let's look at this from a different perspective. Let's say you have
a vehicle that gets 20 miles to the gallon. If you take the 6,000 miles
in the above example and divide that by 20, it tells you that you buy
300 gallons of gasoline per year to travel from one business to the
other. At the current cost of gasoline of $3.67 per gallon, you spend
$1,101.00 to travel the 6,000 miles. Now, if that were Natural Gas
at an approximate $1.00 per gallon, depending on where you are
and what the tax per gallon is, you would only spend $300.00
instead of $1,101.00.

While the national average price of gasoline is now $3.67, some
residents of Utah are happily filling up on compressed natural gas
(CNG) at $0.63 per gallon. That’s the country’s lowest price for CNG,
which has understandably caused a surge in demand for vehicles
running on a fuel that one man described as “practically free.”

The NGVA also says there are 50 different manufacturers producing
150 models of light, medium and heavy-duty vehicles and engines that
run on compressed natural gas. Unfortunately, there’s only one for sale
to individuals, Honda’s Civic GX, and it’s only offered in California and
New York (although Utah could be next on the list). California ranks
highest in number of CNG refueling stations, but fuel prices are also
higher—more like $2.50 per gallon. Even at that it's still a $1.00 less
than gasoline.

The big question in Utah is whether or not the infrastructure can keep
up with the amount of new CNG cars on the road. Utah already has
5,000 CNG vehicles, up from none a few years ago, essentially
overwhelming the refueling network.

My recommendation is to make your Tax Professional aware of the
Tax laws, and to buy the book mentioned above. I believe that cost
is $27.95, but it is also a tax deduction as are other business
publications you buy.