8741 / Are business-related travel expenses deductible if a taxpayer resides in a location that is far from the taxpayer’s principal place of business?

A taxpayer is entitled to deduct business travel expenses, but is not entitled to deduct the costs incurred in commuting between the taxpayer’s principal residence and place of business.¹

When a taxpayer chooses to reside in a location that is far from the taxpayer’s principal place of business, the issue is not whether the taxpayer is “away from home” when travelling between a residence and place of business, but whether or not the travel expenses are sufficiently connected to a trade or business as to be deductible under Section 162.

For example, the Tax Court has denied the taxpayer’s travel expense deductions in a situation where the taxpayer maintained a residence in Tennessee with the taxpayer’s family. The taxpayer was unable to find employment in Tennessee and accepted employment in North Carolina. The family continued to reside in Tennessee and the taxpayer incurred duplicate living expenses as a result, which he attempted to deduct as business travel expenses. The Tax Court denied the deductions, finding that the taxpayer’s choice in maintaining his personal residence far from his principal place of business was not a business expense that was reasonable and necessarily connected to his business. Rather, these duplicate living expenses were the result of the taxpayer’s personal choice to maintain a residence in Tennessee.²

Similarly, a postal employee who lived and worked in New York, but was promoted to a position (national president of the post office) that required him to spend approximately 300 hours per year in Washington, D.C., was unable to deduct his travel expenses between New York and Washington D.C. The taxpayer’s wife continued to live in their New York residence and the taxpayer stayed in hotels and took his meals there while in Washington D.C. Even though the position required that the taxpayer spend significant time in Washington D.C., it did not require that he continue to maintain a residence in New York. Because of this, the expenses that he incurred while residing in Washington D.C. were found to be personal living expenses, rather than business travel expenses.³