Mileage Deduction for Construction Workers

[mblatour]

I have another interesting question for you all! My husband works in the construction trade of sheet metal. Some of his co-workers have been talking about switching to me to have their taxes done. Two of the men drive 1-1/2 hours each way to work in our city. They drive their personal trucks. Both of these men said they have tax preparers who have okay'd their mileage deductions for travel from home to the jobsite and back home from the jobsite. They go to one location each day and stay there all day to work. One of the men said that his uncle is a tax preparer and said it's okay, although it's a gray area, but nonetheless he okay'd it because if the guys is hauling tools for the job to the site each day, it then makes it deductible work mileage. In this man's case, the tools he said he's hauling would be his handtools (he owns them, the company does not, but requires them to work), his hard hat and his safety harness.

The other guy said his tax preparer said the same about mileage being deductible if you are hauling your tools to a jobsite for the company. This happens 5 days a week, 52 weeks a year. This guy said he gets like 30,000 in deductible miles each year.

I won't tell you my thoughts on this yet, because I want to know what you all have to say. Are there any cases to support this? Any loopholes? Thanks!

[BOB W]

Commuting

There is no reason to consider this travel as business. I believe the deductible rule is the excess of expenses over the normal cost of commuting. In your situation I see no business mileage expense.

But then again, you can put anything on a tax return as long as it is not questioned.

[Bees Knees]

TTB, page 10-4, “Commuting from home to a temporary work location is deductible only if the taxpayer has one or more regular work locations, or the temporary work location is outside the taxpayer’s tax home area….Example #2: Shae is a construction worker who gets work through her local union. Most construction jobs are located within the metropolitan area where Shae lives. Each construction project lasts for two to three months. After a job is complete, Shae is unemployed until the union finds new work for her. The cost of commuting to each temporary job site within the metropolitan area is nondeductible personal expenses because Shae does not have a regular place of work. However, on the occasions where Shae is sent out of town on construction projects, the commuting expenses are deductible as business travel expenses….”

TTB, page 10-5, “The cost of commuting from home to a taxpayer’s main job is a nondeductible personal expense. This is true regardless of the distance traveled to get to work.”

TTB, page 10-5, “Hauling tools or instruments to work does not change the use of the vehicle from personal to business. However, any additional costs, such as trailer rental to haul the tools, is deductible.”

TTB, page 8-11, “To determine if a taxpayer travels away from home, the taxpayer must first determine the location of his or her tax home…..”

TTB, page 8-11, “If a taxpayer’s regular place to live is different than his or her tax home, traveling between the tax home and the place of residence is not deductible as travel expenses.”

[Bees Knees]

From Rev. Rul. 75-380

"In Fausner the taxpayer, an airline pilot, who regularly traveled by
private automobile from his home to his place of employment and back
again, sought to deduct the entire cost of his commuting expenses under
section 162(a) of the Code on the theory that his automobile expenses were
incurred to transport his flight bag and overnight bag and thus
constituted ordinary and necessary business expenses. It was not disputed
that the taxpayer would have commuted by private automobile regardless of
whether he had to transport his two bags. The Supreme Court of the United
States, referring to section 262, held that the taxpayer was not entitled
to any deduction with respect to the cost of transporting his flight and
overnight bags in his automobile while commuting to and from his work. In
addition the Court, citing Rev. Rul. 63-100, stated that additional
expenses may at times be incurred for transporting job-required tools and
material to and from work and then an allocation of costs between
"personal" and "business" expenses may be feasible."

The ruling then goes on to explain that there actually has to be additional costs incurred to be able to allocate any costs to business when transporting tools or equipment to work.

[Gene V]

commuting

Bees Knees, your to fast-while I'm typing, your posting.

TTB 10-5 Commuting: The cost of commuting from home to a taxpayer’s main job is a nondeductible personal expense.
Hauling tools: Hauling tools to work does not change the use of the vehicle from personal to business. However, any additional costs, such as trailer rental to haul the tools, are deductible.

Now in Oregon, if you are a construction worker or logger, and if your job is over 50 miles from your home, you can deduct the travel expense on Oregon’s return. You might check with your state and see if they have a similar law.

[Bees Knees]

Sorry Gene, but Minnesota does not have such a law.

In Heuer v. Commissioner, 32 T.C. 947, the court made this comment:

“The courts have always recognized a distinction between expenses of traveling incurred in carrying on a trade or business and commuting expenses, that is, those incurred in going from one's residence to one's place of work and return. The latter have always been held to be nondeductible personal expenses, as distinguished from business expenses…The rule is the same regardless of the distance traveled between the residence and the place of business, regardless of any equitable consideration which makes the use of a particular mode of transportation necessary, irrespective of whether or not public transportation is available, and irrespective of whether living accommodations are available to the taxpayer and his family at or near the place of business.”

[Bees Knees]

I suspect one of the arguments is that since it takes an hour and a half to get to work, they are traveling out of town. That only comes into play if the tax home is in the same area as their residence. It sounds to me as though the tax home is the city in which they do their job, and their residence is an hour and a half away from their tax home. Thus, no travel expenses since they aren’t traveling away from their tax home.

[taxmandan]

Travel with tools

There was a TC decision that allows this deduction. If I have time tomorrow I will try to find the cite, it's been several years since I have used it. The TP argued that he couldn't leave his tools at the worksite else they would disappear that night. The court held that hauling tools back and forth to the worksite was reasonable for security and thus deductible. Hauling the tools is deductible mileage, not the TP traveling back and forth to the jobsite from home even though he is driving the tools there.

[mblatour]

thanks for your thoughts!

I really appreciate all of the info. you gave me. My gut was a "no" from all I have learned thus far in my schooling/training, and the Tax Book helped to firm that up for me, but your thoughts also made it more clear. I am continually impressed by Bees Knees' ability to give quotes so quickly!

Because I am so new to the tax world of preparing returns, I question everything! I probably always will (and should?). I am doing this as a way to bring some income into my home while I stay home with my 2 young boys. I am always trying to find a way to better my knowledge in relation to numbers. I've always loved mathmatics. Tax preparation is so much more than that, but it's a start. I didn't finish college (due to a diagnosed heart problem, I was forced to withdraw) and I worked for several years as an estimator for a big local print shop. After I got pregnant, my hubby and I decided it was time for me to take it easy and stay home so that the pregnancy could be watched. I love being home with my kids; I wouldn't have it any other way, but I still feel a need to be involved. The funny thing is, I am also an Avon lady! This keeps me connected with the outside world. I even received the Best New Performer Award last year for our entire district of 360 women! Why am I telling all of this? Guess I've been couped up all day and needed to vent! I love this site and love to learn from so many knowledgeable people. Hats of to you!

[BOB W]

Travel...

Away from tax home usually requires an overnight stay, or at least a rest period, in order to qualify for away from home travel expense which includes mileage.

[Gretel]

mblatour

Welcome on board and thanks for sharing. How can you talk about venting if you just talk about love?

Anyway, I know what you mean in questioning everything. I started my business 4 years ago and was just overwhelmed (still am). This board and the QF board helped me beyond any words.

Good luck!

[Donanita]

Mileage

Several years ago the taxpayers that lived in north La and drove to south La to work offshore were deducting their mileage.The IRS came in and did a lot of audits and said the south La location was their tax home and not were they lived.So I agree that you would need to determine where their tax home is.

[taxmandan]

Deducting mileage

One court decision on deducting travel expenses for carrying tools/equipment to the workplace is: Coker v. Commissioner, 487 F.2d 593 (2nd Cir. 1973), cert. denied 414 U.S. 1130 (1974), on up. As others have said, it has to be for costs in excess of the expense of commuting.

Questioning everything is a good way to learn the tax business, with that attitude you'll do fine. Sometimes, what sounds off-the-wall and in conflict with what you know about the tax laws may be correct on occasion.

[jainen]

Yeah, but...

>>it has to be for costs in excess of the expense of commuting<<

Yeah, but... if it weren't for the tools in the back of the truck, he wouldn't have ANY commuting expenses!

[mblatour]

help in determining tax home

Here's more about the situation. The 2 workers we are talking about live in Grand Rapids, MN and drive one and a half hours to work in Duluth, MN. It is their choice to work in our city. The company they work for is the largest in Northern, MN for this type of work. The company is located in the city of Duluth. Sometimes the guys work in the shop, but a majority of the time they are sent out to jobsites elsewhere. The jobs can be as far as a block down the road, or in New York. When they get outside the set limit of miles by the company, they are compensated on their checks for travel with what's called "sub-pay". The subpay is supposed to cover their expenses for hotels, food, travel. Most of the time, they make money off the subpay because they share a hotel room, or rideshare.

It just so happens that many of the employees for this company do not actually live in our city, but being as the pay is so good, it's worth their while to drive here each day in order to work. I suppose it's even more so the case for these 2 men whose tax preparers tell them it's okay to deduct their mileage to and from work!

Sometimes the company assigns them to a job that is right in their hometown at a papermill or school. So they might have to drive 5 or 10 minutes to the jobsite.

What do you think about this bit of info?

P.S. I think when I said, 'vent' I meant, 'carry on'. I tend to do that. I appreciate the support!