C is for Carpooling.
You cannot deduct the costs of getting to and from work, no matter if you take a bus, trolley, subway, taxi, or drive your own car. Commuting expenses to and from your regular place of work (as opposed to traveling for work) is never deductible.
Taxpayers are always trying to come up with clever ways to get around this prohibition. The newest effort making the rounds? Carpooling.
Don’t get me wrong: carpooling is great. With gas edging towards $4 per gallon, I think riding with others to and from work is smart. It’s economical. It’s environmentally friendly. It’s just not deductible.
And you can’t make it deductible by adding a twist. So, no, having your colleagues in the car doesn’t make it an office meeting – even if you discuss business the whole time. And pulling out your briefcase to work while someone else drives may make it easier to get things done but it doesn’t change the fact that you’re still commuting. And slapping a bumper sticker or other promotional material on your car doesn’t make it a business vehicle if you’re simply using it for commuting.
Additionally, those expenses associated with the carpool are not deductible. When it’s your turn to shell out for parking, tolls or gas related to the commute, that’s not deductible as a business expense. However, on the flip side, if you are reimbursed from your fellow passengers for parking, tolls, or gas related to the commute, that’s not income: it’s simply reimbursement for expense.
These rules, of course, assume you are carpooling for convenience and not to make a living. If you make the jump from soccer mom to official paid chauffeur, meaning you operate a carpool in order to make a profit, the rules are different. You can deduct expenses associated with the carpool, but you must also include payments received as income.
