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An appeals court has found that an independent contractor’s transportation costs were nondeductible commuting costs.

Third Circuit Upholds Denial of Contractor’s Travel Expenses

  • 6/26/2013

Third Circuit Upholds Denial of Contractor’s Travel Expenses

Affirming the United States Tax Court, the Court of Appeals for the Third Circuit has found that an independent contractor’s transportation costs were nondeductible commuting costs. The taxpayer’s transportation expenses did not qualify for any exception.

The home office exception says expenses incurred traveling between a taxpayer's residence and a place of business are deductible if the residence is the taxpayer's principal place of business. Under the temporary distant workplace exception, a taxpayer may deduct travel and lodging expenses stemming from a series of temporary worksites at which the taxpayer worked during the year, all of which are distant from the taxpayer's residence. Under the regular work exception, if a taxpayer has one or more regular work locations away from the taxpayer's residence, the taxpayer may deduct daily transportation expenses incurred in traveling between his or her residence and a temporary work location in the same trade or business, regardless of the distance.


The taxpayer, who lived in New Jersey, renovated properties in Philadelphia and the surrounding metropolitan area. The taxpayer typically worked at the jobsites for several months. When the project was completed, the taxpayer moved to another jobsite. The taxpayer claimed deductions for transportation costs between his residence and the jobsites, including truck expenses, tolls, and insurance. The IRS disallowed the deductions, determining that they were nondeductible commuting expenses.

The court agreed with the IRS. Expenses for traveling between a taxpayer’s home and his or her place of business or employment are commuting expenses and, consequently, are nondeductible personal expenses. The taxpayer did not qualify for any of the exceptions to this rule.

Court’s analysis

On appeal, the taxpayer argued that he qualified for the regular work location exception. The Third Circuit rejected the taxpayer’s argument that a building supply store or bank he patronized should be treated as regular work locations for him. The taxpayer’s argument, the court found, would strain the meaning of regular work location. The taxpayer was at the building supply store and the bank as a customer and not as a worker, the Third Circuit found.

The Third Circuit also found no error in the holding that the taxpayer did not qualify for the temporary distant workplace exception. Additionally, the Third Circuit also noted that the taxpayer did not raise the home office exception on appeal and therefore he was deemed to have waived it.

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