Whether you can deduct a taxi or other paid car ride on your taxes depends on why you're taking the cab ride. Certain uses of a cab are deductible, but if you're just taking a taxi or Uber to go out for the evening or to go to the airport to visit family, that will not be.
If you're self-employed and taking a taxi for business purposes, your cab expenses are generally deductible under Internal Revenue Service standards. If you're using a taxi for charitable work or transportation for medical needs, that can also be deductible.
Self-Employed Business Cab Expenses
If you're traveling for business and you're self-employed, you can generally deduct business travel expenses on Schedule C of your Form 1040 tax return. If you're someone's employee, you could deduct such expenses beyond a certain limit through tax year 2017, but that deduction is going away as of tax year 2018.
Generally, if you're on a business trip or you're in your home city and traveling to some place other than your home and your ordinary place of business, such as going from your office to a restaurant or a client office for a meeting, you can deduct the cost of transportation. If you have two regular places of work, you can deduct the cost of going from one to another.
For example, if you're on a business trip to Houston, you can deduct an Uber from the airport to downtown Houston and deduct an Uber cost in Houston for going from a client site to your hotel. If you normally work in an office you rent in your city and must take a taxi to your client's office, that is deductible as well.
The exception is that you cannot deduct the cost of going from your home to your regular place of business. This is considered your regular commute and is not tax deductible, whether you're self-employed or work for someone else.
If you're planning on deducting cab charges, Uber fare or similar service charges for business expenses, make sure to keep receipts documenting the charges as well as any documentation, such as emails, explaining why the trips were necessary for your business.
Cab Expenses for Charity
If you're taking a cab or using a car service to travel to do charitable volunteer work, your expense can be deductible. Generally, you can only take such deductions if the primary purpose of the trip is charitable and there's no significant recreation or vacation element to your trip.
Similarly, you can deduct the cost of getting to a place locally where you do charitable work.
Include the expenses with your charitable deductions, and remember that you can only claim such expenses if you itemize your federal deductions, not if you take the standard deduction.
Cab Expenses for Medical Care
You are allowed to deduct your total medical expenses that exceed 7.5 percent of your adjusted gross income in any tax year. You must itemize your deductions to claim this deduction.
These can include transportation expenses, including taxi, bus, plane or other means to get to and from your medical appointments. As with other taxi-related expenses, document your expenses and why they were necessary.
Changes In 2018 Tax Year
The biggest change in the 2018 tax year is that employee business expenses not reimbursed by an employer are no longer deductible. In the past, they were deductible when they exceeded 2 percent of the employee's adjusted gross income. This includes taxi rides taken while doing business for an employer.
Additionally, the standard deduction is increasing for tax year 2018, which may mean some people will no longer claim charitable or medical expenses, including transportation, since it's cheaper not to itemize.
Rules In the 2017 Tax Year
If you're filing a return for 2017, you can still claim employee business expenses as part of a set of miscellaneous deductions in excess of two percent of your adjusted gross income, provided you itemize your deductions. This includes cab rides taken for business as well as things like necessary tools and supplies and uniforms for work, provided they're not reimbursed by your employer. Job search expenses can also be deducted as part of your miscellaneous itemized deductions through 2017.
You can also deduct moving expenses if you're moving for a job through 2017. You do not have to itemize your deductions to do so. Compute your allowable deduction using Form 3903.
Video of the Day
- IRS: Topic Number 511 - Business Travel Expenses
- IRS: Publication 463 (2018), Travel, Entertainment, Gift, and Car Expenses
- IRS: Publication 529 (2018), Miscellaneous Deductions
- IRS: Topic Number 502 - Medical and Dental Expenses
- Kruggel Lawton: Businesses Should Plan to Reimburse for Employee Expenses
- IRS: Topic Number 455 - Moving Expenses for Members of the Armed Forces
- IRS: Publication 521 (2018), Moving Expenses
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