If you use your personal vehicle for business purposes – except for commuting! – you may qualify to deduct the mileage that you travel. But what happens if you take public transit to meet clients or attend business functions? If you are self-employed, that cost is also a business deduction.
(Note that I will be discussing travel within your hometown – i.e., those who live in larger cities and regularly use public transit to get around. If you are in a different city for business and use their public transit system, that would also be a deduction. However, the options below – getting a separate transit card or managing your travel online – may not apply. Just be sure to keep all receipts and document your business travel as always!)
Trips on public transit are easily overlooked by entrepreneurs – but it adds up! The key to deducting trips by public transit is documentation. Often, if a transit system uses a refillable card system, people maintain only one. While this makes sense in saving space in your wallet, this can lead to a messy co-mingling of business and personal expenses.
Option 1: Get a second transit card to use just for business trips
Many transit systems allow people to obtain more than one travel card. If you can do this, get a separate one to use whenever you are using the public transit system for business. Have it set up to deduct or reload from your business bank account.
Pros: Easier to keep business and personal transit expenses separate.
Cons: Can be annoying to maintain and you may end up accidentally mixing up the cards if they are not clearly labeled.
Option 2: Use one transit card and document
Many refillable transit cards have a website you can use to add money to your card or manage your trips. In some cases, this site also documents all past trips and allows you to download a travel history in csv or Excel. This download, combined with your business calendar, will show when you used the transit card for business.
Pros: Only one transit card to maintain.
Cons: Requires time to download travel history from transit card website.
Regardless of which method you choose to maintain your transit cards, be sure to keep records of where you were going and why. Often your business calendar will contain those details. When tracking these expenses in your bookkeeping system, label them as “travel”.