If you've been wondering, "Can I claim parking as a business expense?" the answer is "maybe." Because of the Tax Cuts and Jobs Act of 2017, many long-time business tax deductions changed, including business mileage and parking write-offs.
Depending on why you parked for business and your professional classification, you can usually write off business-related parking, even if you're taking the standard mileage deduction for your driving. In addition, depending on what state you live in, you might be eligible for more deductions on your state income taxes than your federal taxes.
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Consider also: Schedule A: Instructions on How to Itemize Deductions
Contractor vs. Employee
If you are an employee, you are no longer allowed to deduct business-related expenses your employer doesn't reimburse, due to the TCJA. The exception is certain active-duty members of the military. If you are contractor or other worker who files a Schedule C, you can deduct business-related mileage and parking.
You must keep track of your mileage and parking each trip – you can't estimate your annual mileage for tax purposes. You should also keep your receipts or use credit card statements to document your parking. The TJCA rules for deductions expire in 2025, unless the provisions are renewed.
Commuting vs. Business Trips
Even if you are a part-time contractor, if you drive to a work site on a regular basis, that's considered a commute, and you can't write off those parking expenses. For example, if you are a personal trainer and you rent space at the same gym each day, you can't write off your mileage and parking when you go to work.
If you drive to a variety of client's homes, work out of several gyms and don't have a regular schedule at them, you can write off your mileage and parking. If you visit the same gyms over and over, you can write off your mileage and parking if those trips are not a regular part of your schedule.
For example, if you work at a gym every Wednesday morning for three hours, that would be a commute. If you have clients who meet you at this gym several times a month, that's not a commute.
Charity and Medical Parking
People who make trips doing charitable work or for medical reasons can take a deduction. The deductions are lower than the standard deduction, and you'll need to check the rate each tax year.
Taking Business Trips
You can write off business-related parking during trips if the primary purpose of the trip was for business. Many people mistakenly believe they can write off vacations if they do some work during the trip.
For example, you travel to Florida for a one-day business seminar, then take the family for a five-day vacation. You would only be able to write off one day of parking if it was necessary to attend the seminar.
What Does Mileage Include?
The standard mileage deduction does not include parking expenses. When you take the standard deduction, that covers your gas, oil, tires, air filter, repairs and loan or lease costs. You cannot write those expenses off. Parking is not included in the standard deduction.