Do I need to claim a home office deduction in order to deduct business mileage?

[papajohn72]

My wife runs a cleaning business as a sole proprietor. In a typical day, she travels from our home to several clients' locations in our area and then back home again. There is no "home office" to speak of, other than our home being listed as the legal business address.

However, she doesn't qualify for a home office deduction at this time, as she occasionally uses our home computer or her smartphone for bookkeeping and does not store any inventory. Our home computer is used for both personal and business purposes (bookkeeping mostly).

My question is: Is she allowed to deduct business mileage for traveling from home to clients' locations and then back home again, even though she doesn't actually qualify for a home office deduction? Or would this be considered commuting miles (which are not deductible)?

[Hal_Al · Accepted solution]

If she has a home office, that is considered her work place* and all mileage is deductible. Otherwise, her work place is where she physically works. But if she works more than one place in a day, the inbetween miles are deductible. 

If you go to 2 or more job sites in a single day then the 2nd trip is deductible as an employee expense. For example you leave home drive 5 miles to the 1st job then drive 10 miles to the 2nd site. At the end of the day you drive 15 miles home. Only the 10 miles between jobs is deductible. The first trip in the morning, from home and the last trip at night back home are considered commuting and are not deductible.

*To deduct mileage, to the first client and home from the last client (normal commuting trips) the home just needs to be the "Principal Place of Business".  It does NOT need to qualify for the Home Office deduction (the 'Regularly and Exclusively' rule does not apply).  But, from your description, your home is not her Principal Place of Business.

[TaxGuyBill]

Hal_AL is correct.

[andoro]

Hal_Al and TaxGuyBill seem to be saying different things.  By TaxGuyBill’s definition, the home is her primary place of business—even if she does not maintain a home office—and that is the test that determines whether or not mileage is deductible.  What am I missing here?

[Hal_Al]

Both answers are saying the same thing. My answer adds a simplifier: If you do claim the home office deduction, you qualify to deduct your mileage.
But even if you don't, you may still be able to claim the mileage deduction if your home is your primary place of business.

[andoro]

Thanks, Hal_Al.  I'm getting hung up on the last sentence of your answer... by virtue of the IRS definition, it sounds like the home is her "principal place of business" if she uses her computer at home for bookkeeping, as the smartphone is likely mobile and not used in any regular fixed location.  That's why I'm reading the responses differently.  If I'm wrong, I'd love to know how so I can understand what I'm missing.

[Hal_Al]

You have to compare the poster's description of his wife's activities to the paragraph of TaxGuyBill's answer. Then make a decision whether you qualify. Most people, in her line of work, are going to claim the deduction.  But, from his description her activity is too limited

[TaxGuyBill]

https://www.irs.gov/pub/irs-drop/rr-99-7.pdf

HOLDING

In general, daily transportation expenses incurred in going between a taxpayer’s residence and a work location are  nondeductible commuting expenses. However, such expenses are deductible under the circumstances described in paragraph (1), (2), or (3) below

(3) If a taxpayer’s residence is the taxpayer’s principal place of business within the meaning of § 280A(c)(1)(A), the taxpayer may deduct daily transportation expenses incurred in going between the residence and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.

§280(c)(1)(A):  "the term “principal place of business” includes a place of business which is used by the taxpayer for the administrative or management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business."

[tygrtchr]

If she is an independent contractor, then your home is her place of work and she has no commuting miles.  You do not have to claim deductions for a home office (even if you have one).

If your wife leaves home and goes to one or more of her clients' locations, the entire round trip is deductible since she was travelling specifically for business that she could not do at her own office (home).  If she writes down her starting and finishing odometer readings, that would tell you exactly how many miles of her work day were deductible.  

However, if she detours to stop by the grocery store or to pick up children from school, the miles she spent on the detour is NOT deductible.

If your wife receives a W-2 from any of her clients, the mileage to THAT location is NOT deductible since they are commuting miles.

Basically, if she gets a W-2, miles are NOT deductible; if she gets a 1098 or nothing from the client, all miles are deductible.

[papajohn72]

Thank you! That was exactly the answer I was looking for.