Can You Write Off Parking Tickets on Your Taxes?

Tax deductions can help reduce a taxpayer’s taxable income, potentially lowering the amount of tax owed. The Internal Revenue Service (IRS) outlines criteria for what constitutes a deductible expense, generally requiring that an expense be both ordinary and necessary for conducting a trade or business. An ordinary expense is common and accepted in a particular industry, while a necessary expense is helpful and appropriate for the business activity. Not all expenses qualify for a tax deduction, and understanding IRS guidelines is important for accurate reporting.

Understanding Non-Deductible Fines

Parking tickets, along with other fines and penalties, are not tax-deductible. Internal Revenue Code Section 162(f) prohibits the deduction of any fine or similar penalty paid to a government for violating a law. This rule applies regardless of whether the ticket was incurred during personal activities or while conducting business operations. For instance, a parking ticket received while on a business trip or delivering goods for a company cannot be deducted from taxable income.

This IRS rule prevents taxpayers from reducing the financial consequences of unlawful acts through tax deductions, as this would provide a tax benefit for breaking the law. Amounts paid in settlement of actual or potential liability for a fine or penalty, whether civil or criminal, are also non-deductible, including traffic violations or tax penalties.

While Internal Revenue Code Section 162(f) was amended to allow deductions for certain amounts paid as restitution or to come into compliance with a law, parking tickets do not fall under these exceptions. Fines for violating a law are not considered ordinary and necessary business expenses. This means that even if a business owner or self-employed individual incurs a parking ticket while performing work-related duties, the cost of the ticket itself cannot be written off.

Distinguishing Deductible Parking Expenses

While parking tickets are not deductible, other parking-related expenses can be. Regular parking fees, such as those paid at meters, parking garages, or for valet services, are deductible if they are considered ordinary and necessary business expenses. This distinction is important: the fee for using a parking space is different from a penalty for violating a parking regulation. For instance, if a self-employed individual pays to park while visiting a client or attending a business meeting, that parking fee is deductible.

These deductible parking expenses arise when an individual travels away from their main place of business for work-related purposes. Examples include parking costs incurred during business trips, client meetings, or while performing specific job-related duties. For gig economy drivers or traveling salespersons, parking fees paid while on duty or embarking on a business trip are considered necessary for performing their job and can be deducted.

It is important to differentiate these expenses from non-deductible commuting costs. The IRS does not allow deductions for the cost of commuting between a taxpayer’s home and their regular place of work, including associated parking fees. Even if a business vehicle is used, or business calls are made during the commute, these costs are considered personal. However, if a taxpayer has a qualified home office, travel and parking expenses from the home office to a client meeting are deductible because the home serves as the primary place of business. Accurate record-keeping, including receipts and documentation, is important for substantiating any claimed parking expense deductions.