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Tax Question

deacfan78

deacfan78

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My wife has been offered a sales position that comes with a company car, but she pays for the gas and $50 a month for the use of the car which is pay roll deducted. They reimburse 21 cents a mile. Is she allowed to take the difference between the federal mileage rate and what she is reimbursed as a tax deduction? I thought the fed rate was like 35 cents a mile?

Also, they will give her $45 per month towards her cell phone bill, but I think she would use more than that. Her current personal plan is $150 a month. Would any more than that be able to be taken as a tax deduction at the end of the year?
 
I thought the standard mileage rate was 55.5 cents per mile.

She could not claim the mileage reimbursement through work and instead file for the whole thing come tax time.
 
Liquid Karma said:
I thought the standard mileage rate was 55.5 cents per mile.

She could not claim the mileage reimbursement through work and instead file for the whole thing come tax time.
Click to expand...

So its either or then? Hmm...
 
deacfan78 said:
My wife has been offered a sales position that comes with a company car, but she pays for the gas and $50 a month for the use of the car which is pay roll deducted. They reimburse 21 cents a mile. Is she allowed to take the difference between the federal mileage rate and what she is reimbursed as a tax deduction? I thought the fed rate was like 35 cents a mile?

Also, they will give her $45 per month towards her cell phone bill, but I think she would use more than that. Her current personal plan is $150 a month. Would any more than that be able to be taken as a tax deduction at the end of the year?
Click to expand...

not 100% positive but you get to deduct unreimbursed business expenses, which would be the difference in the two gas rates. Not sure on how phones work, the aggressive approach would be to deduct the $105 monthly difference and claim the phone is a business expense.

Not 100% sure on either response.
 
Liquid Karma said:
I thought the standard mileage rate was 55.5 cents per mile.

She could not claim the mileage reimbursement through work and instead file for the whole thing come tax time.
Click to expand...

She loses out on money that way though, why not take the $.21 cents?
 
palmab03 said:
not 100% positive but you get to deduct unreimbursed business expenses, which would be the difference in the two gas rates. Not sure on how phones work, the aggressive approach would be to deduct the $105 monthly difference and claim the phone is a business expense.

Not 100% sure on either response.
Click to expand...

Well, the phone would be, but she uses it for personal also so I am guessing there might be some sort of allowance the IRS offers. The $150 also includes the service on a personal tablet that she would be using for both as well.
 
Cav will get back to you soon, he is currently trapped in a car with three retarded girls probably looking for a Walmart in Adel Ga.
 
You mention a payroll deduction so I assume she would be paid via W2 wages and not a 1099. I would think you can deduct any unreimbursed business expenses as itemized deductions although they would only be deductible to the extent that they exceed 2% of adjusted gross income.
 
I asked a buddy of mine who used to be a state tax auditor and he didn't think she could write off the difference because it was a company car and not a personal car. That sucks. However, he is not up to date on the tax codes.
 
Liquid Karma said:
I thought the standard mileage rate was 55.5 cents per mile.

She could not claim the mileage reimbursement through work and instead file for the whole thing come tax time.
Click to expand...

I'm not sure what the answer is to the OP's question, but I just wanted to point out that if she takes the 21c/mile from her company, that is the actual amount she'll get. The 55.5c/mile tax deduction is just that - a deduction, right? So that amount would just lower your taxable income by 55.5c*miles, I don't think it would be the straight amount you'd save on your taxes.

ETA: Just wanted to make the point that they are not one-to-one comparable as far as $ amounts.
 
DrummerDeac said:
I'm not sure what the answer is to the OP's question, but I just wanted to point out that if she takes the 21c/mile from her company, that is the actual amount she'll get. The 55.5c/mile tax deduction is just that - a deduction, right? So that amount would just lower your taxable income by 55.5c*miles, I don't think it would be the straight amount you'd save on your taxes.

ETA: Just wanted to make the point that they are not one-to-one comparable as far as $ amounts.
Click to expand...


Good catch.
 
Short answer. No and No.

The full mileage rate only applies if you own the vehicle. Their reimbursements are for your car operating expenses, not wear and tear, since it is a company vehicle. You could take a deduction for actual expenses over the reimbursement, but you would probably end up with an answer of $0 after spending alot of time figuring that out.

With the cell phone, again, they are providing you with the business portion of whatever plan you have. You could determine a % of business usage and take a deduction for that over your reimbursement.

Both of these are subject to the 2% AGI floor, so again your final answer would likely be $0.
 
I think the real answer is - it depends on how aggressive you/your CPA are.
 
ChrisL68 said:
Short answer. No and No.

The full mileage rate only applies if you own the vehicle. Their reimbursements are for your car operating expenses, not wear and tear, since it is a company vehicle. You could take a deduction for actual expenses over the reimbursement, but you would probably end up with an answer of $0 after spending alot of time figuring that out.

With the cell phone, again, they are providing you with the business portion of whatever plan you have. You could determine a % of business usage and take a deduction for that over your reimbursement.

Both of these are subject to the 2% AGI floor, so again your final answer would likely be $0.
Click to expand...

This. And both ChrisL68 and I note the Circular 230 disclosure.
 
Be wary of the potential impact of a -36 loss issue. And by all means get a FIRPTA rep in the agreement.
 
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