Want to know the difference between business miles vs commuting miles? Americans need to brush up on these terms when doing their taxes. Knowing the difference between business miles vs. commuting miles will help get tax deductions, but interchanging them may mean getting in trouble with the Internal Revenue Service (IRS).
Business miles will help individuals apply for reimbursement from the IRS. It is the distance an individual travels between workplaces during work hours. Here are some examples to consider:
- A salesperson may go knocking from one door to the other to sell their products.
- A doctor may travel from one clinic to another or one healthcare facility to the next to do their work.
- A lawyer may go from the law office to the courtroom and back, then go to a café to meet a client before clocking out.
- An employee may be asked to do fieldwork.
More often, the miles refer to the number of miles a person drives to go from one place to the next. But there are cases when trips merit other types of transportation, such as buses, trains, boats, and airplanes.
The IRS sometimes offers reimbursements for business miles. For miles driven, the deduction or reimbursement is based on gas expenses. But for other modes of transportation, the deduction is based on the fare.
The rules on reimbursement do change, so one will need to constantly stay updated.
Commuting miles, in contrast, don’t merit reimbursements or deductions, since they are not considered official trips or travels. Employers may consider transportation allowances for employees who commute long distances for work, but the IRS takes no part in it.
It is important for an individual to be aware of the difference between business miles vs. commuting miles because deducting commuting miles may result in big penalties.