I heard today that you cannot claim mileage from your house to a shop. You can only claim mileage from one shop to another. For example, I drove to *** and it was 12 miles to my first shop. Then, I went to three other shops in the same town and then returned home. I want to claim 26 miles as an expense. But, I can only claim the mileage from shop #1 to shop #4. That's it.

Did the IRS change something here? I do not understand any of this.

According to my tax accountant all business mileage from my home office and back can be claimed. If you have to actually drive to an office before beginning your business stops for the day, the trip from your home to the office would be considered commuting.

I know. That is what I did last year and had no problem at all. The woman who told me this is a lawyer and she read all about it and told me this.

@Canuck wrote:

I know. That is what I did last year and had no problem at all. The woman who told me this is a lawyer and she read all about it and told me this.

Lawyers don't necessarily know anything about taxes. If the woman's not a tax attorney and simply read an article about it, I wouldn't put much stock in it. I'm with LisaSTL on this, but it is ALWAYS best to talk with your own accountant who deals with taxes and preferably works with freelancers, independent contractors, and the rest of us who don't have conventional paychecks or who do this stuff on the side.

I'm comfortable with what my tax guy said and how it relates to both everything posted here and my own interpretation of the IRS regulations. Totally agree with nutmeg state girl is we have to direct our questions wo people familiar with taxes and how they relate to people with home based businesses.

the key word is "home office" not "home."

Thank you all.

I am going to claim mileage from my home office (spare room just for mystery shopping) because you all make sense. I claimed it last year and the IRS was happy.

Home and home Office are two different things. Thanks all again.

Well? All is good. They gave me my refund today. They were okay with what I stated. Thanks everyone.

Canuck, nobody even looked at your return yet. The IRS will process whatever figures you put on the return without question unless you make a mistake with the numbers on a W-2 or say you paid in more than you did. If they're going to audit you it will come much, much later.

So..they haven't looked at my return and yet put the funds in my bank? huh?

That's how it works.

Keep in mind, a lot of returns are filed before the IRS even gets the W-2s and 1099s from the issuers. They have until January 31 to get it to the recipient, but until February 28 to get the IRS their copy. And k-1s from partnerships and corporations may not come out until after the March 15 filing deadline for the underlying tax return and Brokerage statement as well aren't often finalized until March 15 and can be amended even after that.

So the IRS takes your return, checks your math, verifies SSN and names, and sends you whatever refund you think you deserved. Later in the year, after all the other deadlines for documents are passed and the extension deadlines are all passed, they will start matching tax returns to the documents, running statistical analyses on the undocumented figures such as charitable donations (they'll compare what you say you donated against what the average taxpayer in your income bracket donates), business expenses (they'll compare to averages in the industry you said you work in), medical expenses and will flag returns that appear too far outside the norms. They will then send you a letter asking for documentation or explanation of whatever they flagged. That is called a "letter audit." Extreme cases will get a full blown audit.

The only things that kick out immediately are when the same SSN appears on more than one return, such as if two divorced parents try to claim the same child, or if a child and his parents both try to take his exemption.

The tax returns come in fast and furious over only about 2 1/2 months, and another wave of them four to six months later from extensions with not a whole lot in between; they have three years to audit. They don't do it on the spot.

One of the characteristics of our tax system is that is very much on the "honor system." We are expected to file an accurate and truthful return. We behave because of the humongous penalties if we're caught cheating. So there's not a lot of scrutiny of most returns unless something flags them. But, I don't know if this is still an accurate figure, it used to be that about 1 out of 200 returns would get randomly picked for an audit. On that basis, 3 out of 4 people likely will never be audited in their lifetime.

Thanks for the info!

I recall from an accounting class in college that, at that time [1977 or so], if you had H&R Block or one of the other commercial companies prepare your return, you had a statistically higher chance of being audited, than if you had a CPA or did your own taxes.

If I were the IRS I'd pick CPA returns for audits. I've seen more and higher-dollar errors made by CPAs than any other kind of preparer. They don't take the time to ask questions, and they are willing to take risks to get clients higher refunds because they are gambling with the odds of an audit. They charge high enough fees to pay penalties that might result from an audit, knowing the client will still be stuck with the tax bill.

I have seen actual, blatant cheating done by CPA's and totally careless mistakes. I had to amend a CPA return once that resulted in an overstatement of income of $100,000 and an overcalculation of tax owed of $20,000. I refigured that return seven different ways before convincing myself that yes, a CPA actually did make that huge of a mistake because I couldn't believe a CPA would be that careless.

Most CPAs are not tax specialists, they just do taxes because they're expected to. When I was getting my accounting degree we had to choose a specialty. I chose taxes, others in my class chose Corporate accounting or Government or Costing or other specialties. I had to take extra classes in taxation. Most CPAs didn't take those classes.

When I was selling real estate, my most challenging first time buyers were CPAs who were not also tax specialists. Most had no idea how to calculate the tax benefits of home ownership and compare the after tax costs of owning vs renting a home! The first time that happened, I was caught off guard and had left the owing vs renting part of the homebuyer counseling session out for that buyer. Never made that mistake again!

The reason why you cannot claim the mileage from your house to your first Shop is because that would be considered regular driving to any job. People that aren't independent contractors don't get to claim mileage from their house to their job everyday either. Imagine if non independent contractors started demanding to be reimbursed for their mileage everyday to and from the office at how ridiculous that is. Therapists or social workers or whatever that make house calls or school calls have the same rules for mileage; their first shop or into the actual office is not ever covered in mileage and it is a law. also, if they did allow independent contractors to clean the very first and therapist to do it every single person in the world that works outside of their home would start demanding that. What a nightmare that would become. I'm certainly not saying that I don't understand why we would want to be paid mileage whether it's the first Shop or the last, I know I sure would, but I understand why they don't as well.

Home is different from home office. That's what I declared..home office.

MZred,
Please read the IRS publication on travekl from home office to other work sites. Your approach may be very logical, but it is out of touch with the actual rules. Also, please see dspeakes posts on this very subject.

Travel between work locations for the same enterprise is deductible.

If you have a home office for your mystery shop business (and it doesn't have to be a room; see IRS website for definition of a home office) and you leave that home office to go do a shop, you are traveling between two work locations.

If you have a home office for your mystery shop business and also a W-2 job, travel from the home office to your W-2 job is not for the same enterprise and is not deductible. If you then go from work to the McDonald's down the road at lunch time to do a shop, that is still travel between two different enterprises and not deductible.

But if you went from your home office to the McDonald's for a breakfast shop, those miles are deductible.

And then you can go down the road to your day job (non-deductible) and then to a hardware shop after work (non-deductible) and then home again (deductible) to your home office.

Yes, the rules are a bit stupid on the surface. But if you understand how it works, you can work it to your advantage. But the key is to have that home office for mystery shopping. And if you don't have a day job to interfere with this, you can leave home for a route of mystery shops, stop at the grocery store on the way home and the whole trip is a tax deduction. Minor personal errands can be run on a business drive as long as you don't divert more than a half mile or so out of your way.

And do go read about this on the irs website. This is just a quick summary of some of the nuances.

And I have two home offices; one is rented to my corporation for my tax business, the other is my other desk and other computer and is used for mystery shopping. I'm driving between work locations no matter what i'm doing.