Do You Need a Receipt for a Taxi for Deduction?
The cost of taking a taxi for business purposes is typically tax deductible, with a couple of exceptions. If you want to write off the cost of cab fare, however, you should get a receipt for the expenditure. The Internal Revenue Service requires documentation of such tax deductions in most cases.
You can only write off business-related taxi rides for which you were not reimbursed. For example, if your car breaks down and you have to take a taxi to get to the office for a regular workday, you can't claim it as a tax deduction. Commuting expenses, even if they are occasional and are not reimbursed, are not tax deductible. If you take a taxi from your office to the airport to pick up a client, you pay for the fare out of pocket and you are not reimbursed by your employer, the expense is deductible.
The IRS wants to see documentation for your business-related tax deductions, and that includes expenses for cab fare. The best form of documentation is an original receipt with notations describing the business purpose. It also helps to keep a log book, or expense diary, where you can record your expenses. The IRS doesn't dictate a specific method of record keeping, as long as it is accurate and understandable. A physical receipt is not required for taxi expenses of less than $75.
If you worked as an employee, you must itemize your deductions on Schedule A if you want to write off your business-related taxi expenses. Include cab fare with your other employee business expenses and add them to your miscellaneous deductions. Miscellaneous deductions are limited to the amount that exceeds 2 percent of your adjusted gross income. If you incurred taxi expenses as part of your business, you can write those costs off on Schedule C, regardless of whether you itemize or claim the standard deduction.
Medical Taxi Ride
You can deduct the cost of taking a taxi for the purpose of obtaining medical care. This includes cab fare for yourself and another person, such as a nurse, if you are unable to travel alone. You can also write off the costs for a parent to accompany a sick child. To claim the deduction you'll have to itemize and include the cost of the taxi with your other medical and dental expenses. The same documentation rules apply, so if the fare is $75 or more, you'll need a receipt.
Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.