Tax Deductions for Transporting ‘Tools of the Trade’

Deducting commuting costs is generally not allowed. However, there is an exception carved out by the courts for the required transportation of work equipment and tools. The additional cost -- incurred strictly to carry the work implements back and forth -- is deductible as an employee business expense. (Self-employed individuals write off the cost as a business expense on Schedule C.)

Example: Joe works at a construction site in the city. Previously, he took public transportation to work at a round-trip cost of $5 per day. Now, however, he is required to transport equipment back and forth from the job site in a trailer. It costs him $7 a day to drive his car each day and an additional $15 a day for the trailer rental.

According to the IRS, the $15 daily cost of the trailer rental is deductible, but Joe cannot deduct the extra $2 per day cost of driving his car. Reason: Only the additional cost for the same mode of transportation is deductible, even if a less expensive mode of transportation is available.

On the other hand, suppose Joe owns a truck and is able to transport the equipment without renting a trailer. In this case, Joe can deduct the additional cost of $2 per day if he can prove that he would have commuted by public transportation if he was not required to transport the work equipment.

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About the Author(s)

Mike is a Principal in the Youngstown, Ohio office of HBK CPAs & Consultants and has been with the firm since 2001. He has tax and auditing expertise in the industries of contracting, manufacturing, wholesale and retail.

In 2008, Mike received the designation of Certified Construction Industry Financial Professional (CCIFP) from the Institute of Certified Construction Industry Financial Professionals, Inc. (ICCIFP). ICCIFP is a not-for-profit corporation established to promote the highest standards of construction financial management through the credentialing of construction financial professionals. Mike works closely with dozens of construction clients helping them achieve their financial goals and is the head of the Ohio region of HBK’s Construction Niche.

Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.