Tax Planning: Athletic Coaching and Automobile Expense Income Tax Deduction

By JC Leahy
Twitter@TaxHelpWhenNeed

JC Leahy

TAX QUESTION, FROM MIKE, IN BOWIE, MARYLAND:  As a paid sports referee, what  mileage can I deduct when traveling to referee a basket ball game? Can I count the mileage from home to game site and from the game site back to home?

ANSWER:
Mike, you are refereeing games as a regular, paid activity.  You are paid on a 1099-basis  You are, in fact, conducting a small business, and the basketball sites are, in fact, your client work sites.  I know from our conversations that there is no out-of-town overnight travel involved.   You drive from home to the basketball courts and back.

As a rule, when you use your personal automobile to drive to a business site, or between business sites, or to run business errands of any sort -- you are entitled to deduct  automobile costs at the IRS-designated mileage rate.  The exception to this rule is commuting.  Commuting is travel from home to and from a place of regular employment or business.  Commuting miles are personal expenses and are not tax deductible.  If you regularly referee at several athletic facilities and you drive from home, the mileage would probably be classified as nondeductible commuting. All other business mileage EXCEPT commuting is deductible.  This includes mileage for referee-related business errands of any kind as well as mileage for transportation between any business or client locations.

 One way to optimize your mileage deductions would be to have a tax-qualified home office for your referee business, and to engage in business related activities in your home office before and after each trip to an athletic facility.  That way, when you get in your car, you are not driving from/to HOME; you are driving from/to YOUR OFFICE -- to a game.  That's deductible.

For your home office to "qualify", it must be your "principle place of business."  Ever since the aftermath of the Solomon Case in the early 1990's, it has been much easier for a home office "qualify" as your principle place of business.  If any one of these 3 tests is true, your office is your principle place of business:

1. The primary value of your business is delivered in the home office, or
2. You regularly meet with customers or prospects in the home office, or
3. The primary management or administration of your business is conducted in the home office.

Additionally, the home office must be used ONLY for your business, and not for ANY personal things.  And your home office must be physically separated from personal-use areas of your home, as by the walls of the room or by any sort of partition.  If you office meets any of the 3 use tests, is used only for business, and is physically separate, then the office "qualifies" as your as your principle-place-of-business tax-deductible home office

For documentation, you'll need a contemporaneous log of your mileage, and also some sort of written log or evidence about the before-and-after business use of your home office. 

Here's material for further reading:
Small Business Mileage Deductions

Any further questions, of course, let me know!

JC Leahy, MA Accounting