Car expense deductions with multiple work locations
"Suppose that I work from home, but do not qualify for a business use   of home deduction. As I understand it, this means I cannot deduct   trips from home to another work location (e.g., going to a client's   home or office to do work there). I do not think this is true. You cannot deduct trips to your main business location, i.e.: you cannot deduct trips to your office or client's location if this is your main client and you routinely work on-site. However, if you only visit your clients on occasion for specific events while doing your routine work at home - you can definitely deduct those trips. The deduction of the home usage itself has nothing to do with it. However, there's a different reason they refer to pub 587. Your home must qualify as principal place of business (even if it doesn't qualify for deduction). The qualifications of ""principal place of business"" are described in pub 587. ""if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second."" What is not clear to me is what exactly is deductible if there are   significant time gaps (within a single day) between trips to different   clients. You got it right. What this quote means is that if you have client A and client B, and you drive from A to B - you can only deduct the travel between A and B, nothing else. I.e.: if you have 2 hours to kill and you take a trip to the mall - you cannot deduct the mileage attributable to that trip. You only deduct the actual distance between A and B as it would be had you driven from A to B directly. The example you cite re first client being considered as the place of business is for the case where your home doesn't qualify as principal place of business. In this case you start counting miles from your first client, and only for direct trips from client to client. If you only have 1 client in that day, tough luck, nothing to deduct. Also, it's not clear whether stopoffs between clients would really be   ""personal reasons"", since the appointment times are often set by the   client, so it's not as if the delay between A and B was just because I   felt like it; there was never the option of going directly from A to   B. That's what is called ""facts and circumstances"". You can argue that you had enough time between meetings to go back to your home office to continue working. The IRS agent auditing you (and you're likely to get audited) will consider that. Maybe will accept it. Maybe not. If I had a gap like that described above, I could save on my taxes by   going to the park or a hamburger stand instead of going home between A   and B But then you wouldn't be at home, so why would it be ""principal place of business"" if you're not there? Boom, lost deduction for the trip to the first client. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State). You're dealing with deductions that are considered ""red flags"" for the IRS. I.e.: many people believe that these deductions (business use of your home/car) trigger audits. To substantiate business use of your car you need to keep very good track of your travels (literally travel log, they sell them at Staples), and make sure to distinguish between personal travel and business travel, keep proofs that the meetings took place (although keeping a log is a requirement, it can be backdated/faked, so if audited - the IRS will want to see more than your own documentation). A good tax adviser will educate you on all these rules, and also clarify the complexities you were asking about here. I'm not a tax adviser, so don't rely on this answer when you're preparing your tax return or responding to the IRS audit. In your edit you ask this: Specifically, what I'm wondering is whether it is possible for a home   to qualify as a ""principal place of business"" for purposes of   deducting car expenses but not for the home office deduction. The answer is yes. Deductibility is determined by exclusivity of use, among other things. But the fact that you manage your business from your kitchen doesn't make your kitchen any less of a principal place of business. It is non-deductible because you also cook your dinners there, but it is still, nonetheless, your principal place of business. The Pub 587 which I linked to has these qualifications: Your home office will qualify as your principal place of business if   you meet the following requirements. You use it exclusively and regularly for administrative or management activities of your trade or business. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. As you see, exclusivity of the usage of your home area is not a requirement here. The ""exclusively and regularly"" in the quote refers to your business not using any other location, and managing it from home regularly. I.e.: if you manage your business a day in a year - that's not enough for it to be considered principal. If you manage your business from your office and your home - you cannot consider home as principal."
The answer is simple. You can generally claim a deduction for an expense if that expense was used to derive an income. Of course social policy sometimes gets in the way and allows for deductions where they usually wouldn't be allowed. Your rent is not tax deductible because this expense is not used to derive your income. If however you were working from your home, example - you had a home based business, and you dedicated a part of your home for your work, say an office, then part of your rent may then become tax deductible. "Federal taxes are generally lower in Canada.  Canada's top federal income tax rate is 29%; the US rate is 35% and will go to 39.6% when Bush tax cuts expire.  The healthcare surcharge will kick in in a few years, pushing the top bracket by a few more points and over 40%. State/provincial taxes are lower in the US.  You may end up in the 12% bracket in New York City or around 10% in California or other ""bad"" income-tax states.  But Alberta is considered a tax haven in Canada and has a 10% flat tax.  Ontario's top rate is about 11%, but there are surtaxes that can push the effective rate to about 17%. Investment income taxes: Canada wins, narrowly.  Income from capital gains counts as half, so if you're very rich and live in Ontario, your rate is about 23% and less than that in Alberta.  The only way to match or beat this deal in the US in the long term is to live in a no-income-tax state.  Dividends are taxed at rates somewhere between capital gains and ordinary income - not as good a deal as Bush's 15% rate on preferred dividends, but that 15% rate will probably expire soon. Sales taxes: US wins, but the gap is closing.  Canada has a national VAT-like tax, called GST and its rate came down from 7% to 5% when Harper became the Prime Minister.  Provinces have sales taxes on top of that, in the range of 7-8% (but Alberta has no sales tax).  Some provinces ""harmonized"" their sales taxes with the GST and charge a single rate, e.g. Ontario has a harmonized sales tax (HST) of 13% (5+8).  13% is of course a worse rate than the 6-8% charged by most states, but then some states and counties already charge 10% and the rates have been going up in each recession. Payroll taxes: much lower in Canada.  Canadian employees' CPP and EI deductions have a low threshold and top out at about $3,000.  Americans' 7.65% FICA rate applies to even $100K, resulting in a tax of $7,650. Property taxes: too dependent on the location, hard to tell. Tax benefits for retirement savings: Canada.  If you work in the US and don't have a 401(k), you get a really bad deal: your retirement is underfunded and you're stuck with a higher tax bill, because you can't get the deduction.  In Canada, if you don't have an RRSP at work, you take the money to the financial company of your choice, invest it there, and take the deduction on your taxes.  If you don't like the investment options in your 401(k), you're stuck with them.  If you don't like them in your RRSP, contribute the minimum to get the match and put the rest of the money into your individual RRSP; you still get the same deduction.  Annual 401(k) contribution limits are use-it-or-lose-it, while unused RRSP limits and deductions can be carried forward and used when you need to jump tax brackets.  Canada used to lack an answer to Roth IRAs, but the introduction of TFSAs took care of that. Mortgage interest deduction: US wins here as mortgage interest is not deductible in Canada. Marriage penalty: US wins.  Canadian tax returns are of single or married-filing-separately type.  So if you have one working spouse in the family or a big disparity between spouses' incomes, you can save money by filing a joint return.  But such option is not available in Canada (there are ways to transfer some income between spouses and fund spousal retirement accounts, but if the income disparity is big, that won't be enough). Higher education: cheaper in Canada. This is not a tax item, but it's a big expense for many families and something the government can do about with your tax dollars. To sum it up, you may face higher or lower or about the same taxes after moving from US to Canada, depending on your circumstances.  Another message here is that the high-tax, socialist, investment-unfriendly Canada is mostly a convenient myth." The answer on the Canadian Government's website is pretty clear:  Most employees cannot claim employment expenses. You cannot deduct the   cost of travel to and from work, or other expenses, such as most tools   and clothing. However, that is most likely related to a personal vehicle. There is a deduction related to Public Transportation:  You can claim cost of monthly public transit passes or passes of   longer duration such as an annual pass for travel within Canada on   public transit for 2016. The second sleeping residence is hard to justify as the individual is choosing to work in this town and this individual is choosing to spent the night there - it is not currently a work requirement.  As always, please consult a certified tax professional in your country for any final determinations on personal (and corporate) tax laws and filings. You've got two options.  Deduct the business portion of the depreciation and actual expenses for operating the car.  Use the IRS standard mileage rate of $.575/mile in 2015. Multiply your business miles by the rate to calculate your deduction.  Assuming you're a sole proprietor you'll include a Schedule C to your return and claim the deduction on that form. "A.1 and B.1 are properly balanced, but ""Business Expense"" is an expense, not an asset. The T entries should be timestamped.  The time should be equal to the time on the credit card receipts.  This will make audit and balancing easier. A or B can be used, but if the the business is to be reimbursed for personal expenses, the accounts should be renamed to reflect that fact. More explicit account names could be ""Business expense - stationary"" and ""Personal expense - lunch"" or even better ""Personal expense - cammil - lunch"".  With a consistent format, the account names can be computer parsed for higher resolution and organization, but when tallying these high resolution accounts, debits & credits should always be used. When it comes time to collect from employees, only accounts with ""Personal expense"" need be referenced.  When it comes time to collect from ""cammil"", only net accounts of ""Personal expense - cammil"" need be referenced. An example of higher resolution, to determine what ""cammil"" owes, would be to copy the main books, reverse any account beginning with ""Personal expense - cammil"", and then take the balance.  Using the entries in the question as an example, here's the account to determine ""cammil""'s balance: Now, after all such balancing entries are performed, the net credit ""Personal expense - cammil"" is what ""cammil"" owes to the business. The scheme for account names should be from left to right, general to specific." The answer on the Canadian Government's website is pretty clear:  Most employees cannot claim employment expenses. You cannot deduct the   cost of travel to and from work, or other expenses, such as most tools   and clothing. However, that is most likely related to a personal vehicle. There is a deduction related to Public Transportation:  You can claim cost of monthly public transit passes or passes of   longer duration such as an annual pass for travel within Canada on   public transit for 2016. The second sleeping residence is hard to justify as the individual is choosing to work in this town and this individual is choosing to spent the night there - it is not currently a work requirement.  As always, please consult a certified tax professional in your country for any final determinations on personal (and corporate) tax laws and filings. That's tricky, actually. First, as the section 1015 that you've referred to in your other question says - you take the lowest of the fair market value or the actual donor basis. Why is it important? Consider these examples: So, if the relative bought you a brand new car and you're the first title holder (i.e.: the relative paid, but the car was registered directly to you) - you can argue that the basis is the actual money paid. In essence you got a money gift that you used to purchase the car. If however the relative bought the car, took the title, and then drove it 5 miles to your house and signed the title over to you - the IRS can argue that the car basis is the FMV, which is lower because it is now a used car that you got. You're the second owner. That may be a significant difference, just by driving off the lot, the car can lose 10-15% of its value. If you got a car that's used, and the donor gives it to you - your basis is the fair market value (unless its higher than the donor's basis - in which case you get the donor's basis). You always get the lowest basis for losses (and depreciation is akin to a loss). Now consider the situation when your relative is a business owner and used the car for business. He didn't take the depreciation, but he was entitled to. IRS can argue that the fact that he didn't take is irrelevant and reduce the donor's basis by the allowable depreciation. That may bring your loss basis to below the FMV. I suggest you take it to a tax professional licensed in your state who will check all the facts and circumstances of your situation. Your relative might be slapped with a gift tax as well, if the car FMV is above certain amount (currently the exemption is $14000). From the other point of view (company use) it makes sense to segregate expenses incurred on the company's behalf away from an employee's personal expenses.  This way if there were any requirement to prove that certain expenses were for the company's benefit it is not intermingled with an employee's personal expenses.   From an ethical point of view:  To avoid these types of confusing and conflicting issues, most employer's prefer to have a segregated expense process especially if an employee is regularly incurring expenses on the company's behalf.  As YMCbuzz mentions you should check with your employer about their expense policy.