Small Business Tax Answers
Are Parking Tickets Tax Deductible?
Are parking tickets tax deductible? No. Parking tickets cannot be deducted as a business expense. We explain why parking tickets cannot be used to get a tax deduction.
Can I deduct parking tickets?
It's a question we get from many small business owners seeking small business tax advice.
Let's say you are visiting a customer and the meeting runs long. You are unable to get to the parking meter to feed in a few more quarters and you get a parking ticket.
At first blush, it seems like parking tickets should be tax deductible. After all, if it were not for the business meeting, you would not have gotten a parking ticket, right?
The IRS doesn't see it that way.
Parking tickets are not deductible.
According to Internal Revenue Code Sec. 162 (a), you cannot get tax deductions for fines or penalties paid to a government (U.S. or foreign, federal or local).
The core idea is that the government does not want to reward or incentivize its citizens to break the law. Another way to look at is that parking tickets are not necessary expenses for the production of income, and only necessary expenses are tax deductible.
The question as to whether parking tickets are tax deductible was decided in 1975 by the Tax Court when they determined that parking tickets are not business deductions. This was in regards to a case in which a taxpayer was trying to deduct parking tickets as a business expense.
Parking expenses, such as paying to park in a parking lot, are deductible. And, no, you cannot write a check to the city and then record the check as if it were a parking expense. You can do it, but you are without a doubt raising flags that might cause an audit. Moreover, it's simply unethical. Don't do it!
Some tax advisors say that parking tickets are deductible if an employer pays a fine that is the responsibility of an employee. In this case, however, the payment of the parking ticket would need to be treated as income to the employee in order to allow an offsetting tax deduction.
This same logic also applies to moving violations. Traffic tickets, such as speeding tickets, are never tax deductible, because fines or penalties paid for the violation of any law are not tax deductible business expenses.
Strangely, you can deduct your attorney's fees and any costs incurred in the defense of an action in which the nondeductible fine or penalty was imposed. In other words, if you go to traffic court to fight a parking ticket or a moving violation, expenses related to that defense are deductible. If you suspect that the legal industry's lobbyists had something to do with that, you are probably right.
Long story short, the answer to the question "Are parking tickets deductible as a cost of doing business?" is "Nope, you cannot deduct parking tickets as a business expense. Sorry."
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What do you think about the ruling that parking tickets are not legitimate business expenses? Do you have other related tax questions to ask us? We welcome your comments, tips and advice below. Thanks!