Can I deduct tolls and parking for work?
Yes, tolls and parking are deductible when the driving is business-related. What a lot of contractors don’t realize is that tolls and parking are deductible even if you’re already claiming the standard mileage rate. They’re treated as separate expenses. So if you’re driving 25,000 business miles a year and paying tolls and parking on top of that, you get both deductions.
The main rule to understand is the commuting distinction. Driving from your home to a fixed, regular place of business is commuting, and that’s not deductible. Tolls and parking for that drive don’t count either. But here’s where it gets favorable for trade businesses: if you don’t have a permanent office and you’re driving to different job sites, those trips are generally considered business travel, not commuting. A plumber driving from home to a customer’s house is making a business trip. An electrician going from one job to another across Long Beach is making a business trip. The tolls and parking on those drives are deductible.
If you do have a home office that qualifies as your principal place of business, drives from home to job sites are considered business miles and any tolls or parking along the way are deductible too. This is another reason the home office deduction matters for contractors even if the dollar amount of the home office deduction itself seems small.
Parking at a job site, at a supply house, or at a client meeting all counts. Metered parking, parking garages, parking lots. What doesn’t count is parking tickets or traffic fines. Those are never deductible.
The challenge with tolls and parking is tracking them. They’re usually small dollar amounts that happen constantly, so they’re easy to ignore. But $5 in tolls and $10 in parking a few times a week adds up to over $1,000 a year. That’s real money off your tax bill. If you use a transponder like FasTrak, your monthly statements are solid documentation. For parking, snap a photo of the receipt or use a dedicated card so the charges show up on your statement.
When your business tax return gets prepared, tolls and parking should show up as their own line items alongside your mileage deduction. If they’re not there, you’re leaving money on the table. As a CPA for construction businesses, I see this missed all the time with trade businesses that don’t keep clean books during the year and then try to piece things together at tax time. A few minutes of tracking each week saves you hundreds of dollars when April comes around.
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