Transportation expenses, including bus passes, are tax deductible in some situations. The primary factor is whether the transportation costs are recognized as business or personal. Business expenses are deductible, but personal expenses are not. Transportation costs are deemed business-related depending on the need for traveling, such as to and from your personal home, regular business location, temporary work locations and a second job, or away from home overnight.
Principal Place of Business
Transportation costs between your home and your regular or main work location, including bus fares, are considered personal commuting and not tax deductible. Travel expenses from your main work location to other business locations are considered deductible business expenses. A bus pass would be deductible in this instance. If you are self-employed and your home is your principal business location, transportation costs, such as commuting to client offices by bus, are deductible business expenses.
Temporary & Multiple Work Locations
If your regular work location is outside your home and you commute to a temporary work location for the same business, the transportation costs are deductible between your home and the temporary location. If you have no regular work location, you can only deduct transportation costs to a temporary location if it is outside your metropolitan area. If you work at two different places in one day, for the same business or not, you can deduct the transportation cost of getting from one workplace to the other.
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Travel Away From Home
Costs incurred with business travel that requires you to be away from home overnight may be written-off. This includes transportation costs from your home to the business destination, even if multiple transportation modes are used, including bus, car, train and airplane. Transportation expenses incurred from traveling between a bus station and your hotel and from the hotel to a temporary work location, client office or meeting facility are also deductible.
Unreimbursed Transportation Costs
Employees are normally reimbursed by employers for business-related travel costs, including transportation. If an employee incurs business transportation expenses that are not reimbursed by the employer, the employee may write-off these and other miscellaneous expenses via Schedule A. This schedule is only used if the employee itemizes deductions instead of taking the standard deduction. Furthermore, these miscellaneous itemized costs are only deductible to the extent they exceed 2 percent of the employee's adjusted gross income.
