Discussion:Self employed with part time job and home office

One day per week he drives to a W-2 generating job in the same profession as his self employment activity.

He does have a home office for his self employment activity.

Can we deduct the miles driving to the W-2 job?

Thanks.

and would only go on the 2106 depending on whether the person actually worked both locations the same day (perhaps with only one way being deductible).

The City of Philadelphia's regulations consider someone who plays for a contractor to be the employee of that contractor, even if they do not withhold the wage tax.

I am assuming that the day he devotes to his W-2 job, he teaches no private lessons.

"Finally, Rev. Rul. 94-47 amplifies Rev. Rul. 190 and Rev. Rul. 90-23 to provide that, if the taxpayer’s residence is the taxpayer’s principal place of business within the meaning of § 280A(c)(1)(A), the taxpayer may deduct daily transportation expenses incurred in going between the taxpayer’s residence and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance. .......

"If an office in the taxpayer’s residence satisfies the principal place of business requirements of § 280A(c)(1)(A), then the residence is considered a business location for purposes of Rev. Rul. 90-23 or Rev. Rul. 94-47. In these circumstances, the daily transportation expenses incurred in going between the residence and other work locations in the same trade or business are ordinary and necessary business expenses (deductible under § 162(a))."

That's assuming that he works both jobs on the same day.

I'm going to stay with my conditional "if...then" about one or two trades or businesses. You'ld be surprised what the IRS might think about two versus one... Remember when IRS held that being a "teacher" wasn't the same trade or business as being a "teacher"...?

I have a strong intuition that if the IRS had already addressed this issue favorably, *all* of us would already know about it. Continue the search.

I think there is an argument that the W-2 activity is a trade or business, and in fact the same trade or business as is shown on the schedule C. As the great tax commentator Abe Carnow says, "just read the words" in the tax law . . .

But, if the driving is deductible because the schedule C and W-2 activities are the same business, why don't we have all of our clients with W-2 income simply do a bit of consulting work out of their homes, making their commute deductible?

I think I'm going to end up advising the client that the driving to the W-2 job is a nondeductible commute.

The last thing I want is for the IRS to try to claim that some (perhaps a prorata share) of his other business deductions are allocable to the W-2 job and only deductible on schedule A, which would be a total disaster.

Not trying to make the argument that it's one single business makes sense in this case.

Great discussion. Thanks to all - I really appreciate all of the points of view.

The same rationale applies to work dues [it is really odd to see a pay stub for a 1099 with union work dues deducted], and travel costs.

The more difficult question is allocation of other expenses that can not be identified by 'gig' such as purchase of sheet music, instrument supplies and repairs [anyone who has a client that plays a reed instrument like an oboe knows of cane, reeds etc and the money spent on them], continuing education in form of lessons, concerts, and other items peculiar to the musician. These I allocate based on percentage of income. If 40% is on a 1099, 40% are on the Schedule C, 60% on 2106. Generally I put all the expense categories on one of the two schedules and then make a one line deduction to carry the allocation to the other schedule, rather than retype the various categories.

These returns can be very involved: a couple that lives in Middlesex County NJ had 25 W-2 forms and 34 1099s this year, plus other income not reported on 1099s....sad thing is they make little money....gross before expenses was less than 115,000. Major orchestra players earn more than that from one job, and do not have to drive all over creation.

Issues of state returns must be fun as well!