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re: If an employer pays full mileage rate, does leasing make sense?
Posted on 8/3/14 at 8:47 pm to HubbaBubba
Posted on 8/3/14 at 8:47 pm to HubbaBubba
Going back to the tax implications, can you depreciate/write off anything at all if you are compensated for mileage? Is she an independent contractor with an LLC or an employee? Maybe poodlebrain can give some input.
2
Posted on 8/3/14 at 8:59 pm to Ric Flair
I'm pretty sure you can't write off compensated mileage, at the $0.55/mile rate. I used my car as a "runner" for a law firm for about a year, and couldn't write off my car payment. Same with my current job, when I'm reimbursed for business travel at $0.55/mile, there's no tax write off.
If you are not compensated, or compensated at the reduced rate (pretty sure IRS spells this out), then you can write off the expense of the travel (ie. the mileage), but not the car payment itself which the reimbursement rate is intended to compensate.
I don't think there's any tax advantages at all to this arrangement.
If you are not compensated, or compensated at the reduced rate (pretty sure IRS spells this out), then you can write off the expense of the travel (ie. the mileage), but not the car payment itself which the reimbursement rate is intended to compensate.
I don't think there's any tax advantages at all to this arrangement.
Posted on 8/3/14 at 9:28 pm to Ric Flair
Does the OP's spouse have to turn in mileage reports? Or is she just paid so many miles a month?
If she turns in receipts/mileage log, then, she is not taxed on the reimbursements, however, she can't also write off the expenses.
If she does not turn in receipts/mileage log, then, she is taxed on the mileage payments, but she can write off expenses.
Question to the OP - is she a W-2 employee, partner in a partnership, 1099 contractor, etc? That makes a difference also for the tax treatment.
As to the lease/purchase question, leasing generally is more tax favorable if you are a business owner/partner/self-employed. If you are a W-2 employee getting reimbursed tax free, I'd probably buy the car.
I'd also worry about the mileage overages in a lease situation like the one you describe.
Also to the OP, I think the questions being raised by some on here in regards to the type of car required, and the fact that it's not a company car, are legitimate questions. If I'm having to drive a certain type of car for work, and the reimbursements I get are not enough to compensate for the car I'm forced to drive, it does become a financial issue.
If she turns in receipts/mileage log, then, she is not taxed on the reimbursements, however, she can't also write off the expenses.
If she does not turn in receipts/mileage log, then, she is taxed on the mileage payments, but she can write off expenses.
Question to the OP - is she a W-2 employee, partner in a partnership, 1099 contractor, etc? That makes a difference also for the tax treatment.
As to the lease/purchase question, leasing generally is more tax favorable if you are a business owner/partner/self-employed. If you are a W-2 employee getting reimbursed tax free, I'd probably buy the car.
I'd also worry about the mileage overages in a lease situation like the one you describe.
Also to the OP, I think the questions being raised by some on here in regards to the type of car required, and the fact that it's not a company car, are legitimate questions. If I'm having to drive a certain type of car for work, and the reimbursements I get are not enough to compensate for the car I'm forced to drive, it does become a financial issue.
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