Business Miles vs. Commuting Miles for the Self-Employed

For self-employed individuals, correctly categorizing vehicle use is a component of managing tax obligations. The distinction between personal commuting and deductible business mileage is governed by specific Internal Revenue Service (IRS) rules that impact the vehicle expenses a business owner can claim. Misinterpreting these regulations can lead to inaccurate tax filings. Understanding the definitions the IRS applies to each type of travel is necessary for maintaining compliant records and accurately calculating tax deductions.

Defining Commuting Miles

The IRS establishes that a personal commuting expense, which is not deductible, is the daily travel from your home to your main or regular place of work. A “regular place of business” is a location where you consistently conduct business, such as a rented office or a separate workshop. The travel to this fixed location is a personal expense.

For example, a freelance consultant who rents a desk at a coworking space cannot deduct the daily drive from their home to the office. Similarly, a potter who leases a separate studio for their equipment cannot deduct the miles driven from their house to the studio each morning.

Taking a business call while driving to your regular office does not convert the trip into a deductible expense. The nature of the trip is determined by its endpoints—your home and your primary place of business—making the mileage a non-deductible personal cost.

Defining Business Miles

Business miles are incurred for specific, work-related purposes and are deductible. The IRS defines these as miles for travel that is ordinary and necessary for your trade or business. A primary example is driving from your regular place of business to a client’s location, such as an IT consultant driving from their office to a client’s headquarters. Another common scenario is travel between multiple work sites; a general contractor who drives from a completed construction project to a new site is accumulating business miles.

Business miles also include travel for errands, like driving to a bank to deposit customer checks or visiting an office supply store. Travel to a business meeting or a professional conference also qualifies. Driving to an airport or train station for an out-of-town business trip is also deductible, as this is part of the overall business journey.

The Home Office Exception

The rules for deductible mileage change for a self-employed individual whose home qualifies as their principal place of business. When a home office meets IRS criteria, it becomes the starting point for business travel, converting previously non-deductible trips into valid business mileage.

To qualify, a portion of the home must be used exclusively and regularly for conducting business activities. The “exclusive use” test means the area is used for nothing else, while the “regular use” test implies the space is used consistently.

With a qualifying home office, a trip from your home to a client meeting is no longer a commute; it is travel from one business location to another. Trips from the home office to the bank, post office, or to pick up supplies are also converted into deductible business miles. This makes establishing a qualifying home office a way to maximize vehicle expense deductions.

Recordkeeping for Mileage Deductions

To claim a deduction for business miles, you must maintain thorough and contemporaneous records. Without proper documentation, an otherwise valid deduction can be disallowed. For each business trip, your records must substantiate several pieces of information.

• The date of the trip
• The total miles driven
• Your destination or the location of the travel
• The specific business purpose of the trip

In addition to trip details, you must record the total number of miles the vehicle was driven during the year for all purposes—business, commuting, and personal. The IRS also requires the odometer reading from the beginning and end of the year. This allows for the calculation of the business-use percentage of your vehicle. You can maintain these records with a physical logbook, a digital spreadsheet, or a GPS-based mileage tracking application, but the information should be recorded at or near the time of the trip.