DEFINITION of Commuting Expenses
Expenses that are incurred as a result of the taxpayer's regular means of getting back and forth to his or her place of employment. Commuting expenses can include car expenses and public transportation costs.
BREAKING DOWN Commuting Expenses
Commuting expenses are never deductible, unless the taxpayer has more than one job. In this case, the cost of commuting from one place of employment to the other on a regular basis would be tax deductible. Commuting expenses can include train, subway, bus or ferry tickets, or gas. Some businesses offer a commuting allowance or build-in costs into benefits, but frequently, commuting expenses are paid out-of-pocket by an employee.
According to the Internal Revenue Service, a Commuter Expense Reimbursement Account, allowed by § 132 of the Internal Revenue Code, lets employees to have their parking and commuter expenses deducted on a pre-tax basis. In 2018, employees can deduct up to $260 per month for transit expenses or up to a maximum of $260 per month for parking.
When the Tax Cuts and Jobs Act was signed into law on December 22, 2017, it impacted employers with commuting employees. Employers no longer receive a federal deduction for offering mass transit, parking benefits, commuter highway vehicle, or parking benefits to employees, unless it is required due to keeping employees safe.