When you fly to a city and need to get from the airport to your hotel and back, you might choose to take a taxi. If you're traveling on business, or if you came to town to get medical treatment, you can probably write off any taxi rides when you file your federal income tax return. If you're in town on vacation, that's a different matter.
Employee Business Expense
If you work as an employee and you have to take a taxi for business purposes, you can include the cost of both your cab fare and tip to the driver with your other employee business expenses. Add these expenses to your other miscellaneous expenses when you file your federal tax return. You'll have to itemize your deductions to claim a write-off, and miscellaneous expenses are limited to the amount that exceeds 2 percent of your adjusted gross income, but every little bit helps.
If you operate your own business, you can claim taxi expenses as part of your travel expenses on Schedule C. You don't have to itemize your deductions, and your expenses are not limited by the Internal Revenue Service's 2 percent rule. The only requirements are that the taxi ride be for business purposes, the expense must not have been reimbursed and you can't claim a deduction for commuting to or from your regular place of business.
You can deduct transportation costs, including taxi fare, for seeking medical care. The deduction is typically limited to travel costs you incur as a patient, but you can also write off travel costs of medical personnel, such as a nurse, who travels with you to provide care, or if you must accompany your child to get medical care. You'll have to itemize your deductions and include your taxi expenses with your other medical and dental expenses. Only that portion of the health care expenses that exceeds 7.5 percent of your adjusted gross income are deductible as of 2012.
If you plan on writing off the cost of taking a taxi, you'll need to document your expenses. The IRS doesn't dictate any particular method of record keeping, but it requires that you be able to substantiate your claims. A receipt that includes the date, location and business purpose for the taxi ride provides documentary evidence of your expense. A written travel log documenting your expenses might also serve your purpose, because documentary evidence for transportation is not required if the expense was less than $75 or if a receipt was not readily available.
- Internal Revenue Service: Publication 17, Recordkeeping
- Internal Revenue Service: Publication 502, Medical Expenses, Transportation
- Internal Revenue Service: Publication 463, What Travel Expenses Are Deductible?
- Internal Revenue Service: Topic 514 - Employee Business Expenses
- Internal Revenue Service: Schedule A
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