Understanding The Business Mileage Deduction

The IRS allows self-employed individuals with a qualified home office to deduct business mileage from their home office to other business locations under IRC Section 162(a). This is because the home office is considered their principal place of business, so trips from this location to client sites, meetings, or other work-related destinations qualify as deductible business mileage.

Key Requirements for Deducting Business Mileage:

1. The home office must be the taxpayer’s primary place of business, satisfying the “exclusive use” and “regular use” requirements (IRS Code §280A).
2. The mileage is deductible only for travel from the home office to other work-related sites and back.

Examples of Deductible Business Mileage:

1. Client Visits
   • Example: A self-employed graphic designer with a qualifying home office drives 30 miles round-trip to meet a client. The 2023 standard mileage rate for business is 65.5 cents per mile, so he can deduct 30 miles×0.655=$19.65 
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2. Supplies and Business Errands
   • Example: A freelance carpenter with a qualified home office drives 10 miles round-trip to pick up materials from a hardware store for a project, so he can deduct  10 miles×0.655=$6.55
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3. Meeting Spaces and Networking Events
   • Example: A consultant travels 50 miles round-trip from their home office to attend a networking event relevant to their business, so he can deduct 50 miles×0.655=$32.75
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4. Going to co-working space used regularly
   • Example: A freelancer with a home office rents a desk at a co-working space and travels there every morning. Since this travel is regular and predictable, the IRS would likely treat it as commuting, making it non-deductible.
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5. Client visit, then to co-working space, then home
   • Example: A consultant with a home office goes to a client’s office in the morning, then to a co-working space he uses not regularly, then back home. The trip to the client’s office and co-working space is deductible as business mileage, but the final trip home is treated as non-deductible commuting.

IRS Publication 587 states that taxpayers must maintain detailed records for each trip, including dates, locations, and the business purpose of travel, to ensure eligibility for deductions.

Next time, we will talk about the methods to deduct the business mileage use of vehicles. If you like this information, please subscribe to our blog!

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