Can I Deduct Traffic Tickets As a Business Expense?

Each year, individuals and businesses pay a percentage of their taxable income to the United States through the Internal Revenue Service (IRS). Based on the tax code, you can deduct certain business expenses from your taxable income and avoid paying taxes on those expenses. Many items fall under eligible business expense deductions but traffic tickets do not.

Business Deductions

The IRS allows a number of business deductions from your annual income against your tax return. The IRS requires that the deductions be both ordinary and necessary. Ordinary is defined as a common and accepted expense by your industry. Necessary means it’s a helpful and appropriate expense by your industry. For example, the expenses you incur traveling for your business are usually deductible.

Traffic Tickets?

Many business owners question whether all costs incurred while traveling for business can be deducted, including traffic tickets. According to the U.S. tax code, fines incurred to the government are not tax deductible. So during your business trip, you can deduct gas you use, the parking fees and the tolls you pass through, but you can’t deduct the speeding ticket cost from your taxable income.

Reasoning

The idea behind this restriction is that if you receive a traffic ticket, you’re breaking the law in some way. Breaking the law is not a common or necessary expense in any industry. It’s easily avoidable by following the laws and regulations of your area. Allowing you to deduct your traffic ticket fine on your taxes is almost the same as rewarding you for breaking the law.

Consequences

If the IRS catches you trying to deduct traffic tickets as a business expense, you can face penalties. At the very least, you'll have to pay the difference in the taxes you filed with the deduction and the correct tax bill, with interest and penalties added. In some cases, if the deduction is believed to be an intentional fraudulent act with a significant outcome, such as many traffic ticket deductions over many, many years, you can face criminal charges for tax fraud.

References

About the Author

Michaele Curtis began writing professionally in 2001. As a freelance writer for the Centers for Disease Control, Nationwide Insurance and AT&T Interactive, her work has appeared in "Insurance Today," "Mobiles and PDAs" and "Curve Magazine." Curtis holds a Bachelor of Arts in communication from Louisiana State University.