A taxi ride is not an economical means of transportation. The cost of using a taxi to run errands can really add up. However, there are certain circumstances where the cost of that taxi ride may be an eligible tax deduction. If your reason for using a taxi meets the criteria, that taxi ride could end up lowering your tax bill.
Normally, the cost of transportation from your home to your place of business is not a tax-deductible expense. However, if you have a temporary assignment -- expected to last one year or less -- at a different location than your usual workplace, the cost of transportation is deductible. If you do not have a usual workplace but typically work within the city or suburbs where you live, transportation expenses outside that metropolitan area are deductible. For example, you receive an assignment that takes you out of your metropolitan area. If you must use a taxi because you do not have a car and there is no public transportation available, that taxi ride would be deductible. If you are traveling away from home for business, the cost of a taxi to take you to and from an airport to your hotel and from your hotel to your client is a tax-deductible expense.
For Medical Care
You may deduct the cost of transportation to receive essential medical care. If you are ill and require a taxi to take you to your doctor or the hospital, the fare is deductible. The cost is not deductible if the travel is not essential, such as going to the doctor for an annual physical.
You are allowed to deduct any unreimbursed expenses that you incur while doing volunteer work for a charitable organization. As part of your volunteer duties, if you are required to travel to a different location and use a taxi for your transportation, the fare is deductible as long as the charity does not reimburse you. Transportation costs are also deductible if you are away from home performing duties for the charitable organization. You may even deduct the taxi costs if you pay them indirectly -- the organization pays the fares but you made a donation to the organization to cover the costs.
When using a taxi, be sure to ask for a receipt. Make a note of the date, time and purpose of your use of the taxi and maintain these receipts to support the deductions on your tax return.
- Jupiterimages/Photos.com/Getty Images