Can I Deduct a Speeding Ticket?
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In a recent post about saving money on gas, I wrote that you should avoid speeding to get better gas mileage, as well as to avoid the expense of speeding tickets. That prompted one reader to email me and ask (rather sheepishly) if she could deduct the cost of a speeding ticket on her income taxes. She was driving between shops at the time she got the speeding ticket, so would it be considered a business expense?
Sorry to be the bearer of bad news, but speeding tickets and other fines are considered personal expenses by the IRS and they are not deductible. (Yet another reason to watch your speed.) Although I am not a CPA or tax professional, I consulted information from the IRS, and they are pretty clear on this.
A quick search of the IRS web site turns up Publication 463, Travel, Entertainment, Gift, and Car Expenses. According to this publication:
You cannot deduct fines you pay or collateral you forfeit for traffic violations.
The same rule would apply to other fines or tickets you received, such as parking tickets, even if you were on business at the time. Of course, you may deduct fees paid for parking (e.g., in a lot or garage or at a meter) when incurred for a business purpose.
So the lesson here is that breaking the law can quickly turn a profitable mystery shopping trip into an unprofitable one. Keep yourself safe and profitable by watching your speed and obeying other traffic laws, whether you are on or off the job.
Now, if you were hired to mystery shop the local police department, that might be a totally different situation. ;o)
4 Responses to 'Can I Deduct a Speeding Ticket?'
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on September 18th, 2007 at 9:56 pm
How can I prove that I put money into a meter since it doesn’t give a reciept?
on September 19th, 2007 at 8:54 am
The IRS does not require receipts for travel and transportation expenses under $75, according to Publication 463. However, they do require a written record that includes information such as the date, the amount and the business purpose.
Your “written record” may actually be an entry on a computing device, such as a PDA, instead of a log book or other paper record.
Anyone with business expenses should get a copy of Publication 463, either online at http://www.IRS.gov/ or by requesting one from the IRS. It is a great reference.
on September 30th, 2007 at 5:01 pm
How do taxes work with mystery shopping? Do I need to put back a percentage of my earnings so I can pay my taxes at the end of the year? What’s recommended?
on September 30th, 2007 at 5:22 pm
Yes, you will have to pay taxes on your mystery shopping earnings. How much depends on what tax bracket you are in.
Taxes are due on your net income. That means the profit you make, after deducting expenses. You may also be responsible for self-employment tax (Social Security tax).
Some shoppers set up a separate bank account and deposit a portion of their mystery shopping profits there throughout the year. Others who work at a “regular job” in addition to mystery shopping set their withholding rate a little higher, so more tax is withheld from their paychecks.
I will include more information on mystery shopping and taxes in future posts. You may also want to refer to the IRS web site at http://www.irs.gov/ for more information. Look for resources for small businesses and independent contractors.
Canadian taxes work much the same way. If you are a Canadian mystery shopper, get tax info at http://www.cra-arc.gc.ca/menu-e.html