Tax Deductions for Transporting ‘Tools of the Trade’

Date November 1, 2016
Authors Michael Kapics

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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