Are Parking Costs for Work Deductible?

Gregory Hamel for Demand Media writes: necessary to do their jobs, but employees can incur certain work-related expenses, including the cost of driving and parking for business. If you use your car for your job, you may qualify for a tax deduction on your vehicle expenses. You can include parking fees in your vehicle deduction if you incur the fees while using your car for business purposes.

COMMUTING EXPENSES

The business use of a car is tax deductible, but not all job-related driving counts as business use. The cost of driving to and from your main place of work is not considered business use, so all expenses related your normal commute are not deductible. In other words, fees you pay to park at your regular place of work are nondeductible commuting expenses.

DEDUCTIBLE PARKING COSTS

Although commuting costs aren't deductible, car expenses and parking costs are deductible in other cases. If you drive your car to visit clients or customers, the costs of operating the car and of paying parking fees and tolls are deductible. Similarly, costs related to driving to a business meeting or conference away from your regular workplace are deductible. When you drive outside of the general area that the Internal Revenue Service calls your "tax home" and stay overnight for business, you can deduct the cost of the trip, including car use, parking and lodging. You can't take claim a deduction on expenses that are reimbursed by your employer.

DEDUCTING ACTUAL EXPENSES

You have two options when it comes to claiming a deduction for business use of your car: the actual expense method and the mileage rate method. Under the actual expense method, you keep track of all the costs you incur while using your car for business and take a deduction for that amount. You have to claim parking fees and expenses separately from other car expenses on line 2 of Form 2106.

MILEAGE RATE METHOD

The mileage rate method lets you claim a deduction based on the total number of miles you drive for business multiplied by a standard mileage rate. According to the IRS, the standard mileage rate was set to 56.5 cents per mile on January 1, 2013, but it is subject to change periodically. The standard mileage rate does not include costs that are not directly related to operating a vehicle, such as parking fees and tolls, so you will still need to claim them on line 2 of Form 2106.