Commuting to and from work is a necessary part of almost any job. Whether you are driving, taking the bus, or using other public transportation, you can expect to put in several miles each week. But while it is easy to keep track of the miles you are putting in for your commutes, how can you determine when your miles should be classified as business miles?
Business miles are miles that are driven for business-related activities, such as making sales calls, traveling to meetings, or setting up events. In contrast, commuting miles are miles driven to and from work, and these should not be classified as business miles. However, there are times when the lines between commuting miles and business miles can be blurry. Clarifying when to classify miles as business miles and when to classify them as commuting miles is essential in order to ensure accuracy in your documents and taxes. In this blog post, we will explore the differences between commuting miles and business miles, and how to navigate
What is the difference between Business and Commuting Miles? Which are deductible?
What are business miles?
The distance an individual travels between one workplace and another is measured in business miles. A doctor, for instance, might travel several business miles to get from one clinic to another if they work in several different clinics. You may keep track of your business mileage manually in a document or your employer may give you a tracker so you can do so automatically.
While business miles typically refer to the number of miles a staff member logs behind the wheel, they can also occasionally refer to other forms of transportation, such as flights, buses, trains, or ride-sharing services. In these circumstances, the IRS may calculate tax deductions based on the amount an employee pays for travel expenses rather than the amount they spend on gas.
What are commuting miles?
The distance an individual travels to and from work each day is measured in commute miles. Although the Internal Revenue Service (IRS) does not provide deductions for commuting miles, employers may pay their employees for making long commutes to work. When deciding whether you want to work for a company, the commute time might be something you take into account. Additionally, you might decide on a job based on whether or not the employer will pay for your lengthy commutes.
Although the IRS typically doesn’t reimburse employees for commuter miles, they occasionally do so in certain circumstances. Here are some scenarios in which the IRS might pay you back for your commuter miles:
Commuting miles vs. business miles
Here are several differences between commuting miles and business miles:
Reimbursements
Type of mileage
Commuting miles and business miles are two different categories of mileage in the eyes of the IRS. Individuals drive from their homes to their places of employment and from their places of employment to their homes as part of their commute. Since driving to work each day is a requirement for employees, the IRS counts commuter miles as daily travel expenses. Business miles are regarded by the IRS as additional business expenses, so they are eligible for tax deductions.
Time that the mileage occurs
Typically, during a workday, commuter miles and business miles are split up at different times. Since they involve an employee’s commute to and from work, commuting miles frequently happen before and after work. Business miles often occur during the workday. Depending on their duties and position, employees may drive business miles only occasionally or for the majority of their working day. For instance, a pizza delivery person might spend the majority of their shift traveling long distances to make deliveries.
Calculation
Commuting miles and business miles involve different calculations. Since the IRS doesn’t reimburse you for the distance you travel to and from work, employees are less likely to calculate their commute miles. To figure out how many miles you must travel to get to work each day, multiply the distance by two to account for the distance to get home. For instance, if your home is 10 miles away, your daily average commute would be 20 miles.
Add up the distance between each work location to determine the number of business miles you drive. Add up all of the business miles, then multiply that number by the annual standard mileage rate. The amount you might be qualified to receive as a reimbursement is the result of your calculation. As an illustration, if you travel 20 miles for work each day and the standard mileage rate is $0 50, you would be qualified for a daily reimbursement of $10.
Cost of driving
The total cost of gas used by your car while driving for commuting and business purposes is referred to as this. Depending on how far you must commute to work and how many miles you must drive for business each day, the cost of driving for commuting miles and business miles is different. Since commuter miles are typically less expensive than business miles, you might have to drive to several offices throughout the day.
Employee control
Employees can choose how far they travel to work, but employers determine how many miles their employees must travel for work each day. If a worker determines that their commute is taking longer than they would like, they may decide to look for work that requires fewer commute miles. Additionally, they might opt to commute to work via other modes of transportation, such as public transportation or a carpool with a coworker.
Due to the possibility of daily travel for work-related purposes, employees typically have less control over the number of business miles they must log. For instance, a business might mandate that a sales representative travel to five different venues to deliver a sales presentation.
Number of stops
Depending on whether an employee is using commuter miles or business miles, there are restrictions on how many stops they can make while driving. They can make as many stops while commuting to work as necessary because they are not required to track their commute mileage in order to be eligible for reimbursement.
Anyone requesting reimbursement eligibility must travel directly to each workplace, which means they can only make a few stops along the way. By doing so, you can assist the IRS in tracking the precise number of business miles you log each workday, ensuring that the reimbursement amount is correct.
Please note that Indeed is not affiliated with any of the businesses mentioned in this article.
FAQ
What’s the difference between business miles and commuting miles?
If a business mile is the distance between two places of employment, a commuter mile is the distance between your home and a place of employment. For instance, driving between your home and an office building would count as commuting.
What is considered a business mile?
For travel from your place of employment to job sites, client meetings, and business errands, you can deduct business miles. Except when driving from a home office to another place of employment, the commute from home to work is not deductible.
What does the IRS consider commuting?
The cost of transportation between your home and your main or regular place of employment, as defined by the IRS, is not deductible from your taxes.
How do you calculate commuting miles?
You cannot deduct or count any miles when you are driving from your home to your regular place of business or to your first job of the day because those miles are considered commuter miles. Any additional miles you log for work are considered business-related miles.
