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Started By
Message
Taxes regarding a car allowance from work and work mileage
Posted on 2/3/23 at 7:11 pm
Posted on 2/3/23 at 7:11 pm
I'm a superintendent that drives about 40k miles a year on my own vehicle. The company I work for gives me a chunk each month to cover the costs on the vehicle and gives me a W2 each year.
The difference between putting the business miles on my return or not is about 1200 dollars. I have never been in this situation before as I started last year with this company and I'm not sure how to handle my taxes. I have a few thousand in other expenses related to work.
If I file using miles, is this going to red flag me for an audit and am I doing this incorrectly? I have always done my own taxes with no issue, I just can't find an answer for this anywhere else.
ETA: why am I getting downvoted for asking an obscure tax question that I haven’t run across? Td is just a weird place sometimes.
The difference between putting the business miles on my return or not is about 1200 dollars. I have never been in this situation before as I started last year with this company and I'm not sure how to handle my taxes. I have a few thousand in other expenses related to work.
If I file using miles, is this going to red flag me for an audit and am I doing this incorrectly? I have always done my own taxes with no issue, I just can't find an answer for this anywhere else.
ETA: why am I getting downvoted for asking an obscure tax question that I haven’t run across? Td is just a weird place sometimes.
This post was edited on 2/4/23 at 7:50 am
6
Posted on 2/3/23 at 10:39 pm to Warfarer
If they are paying you for the miles you can’t write them off too.
Posted on 2/3/23 at 11:39 pm to Warfarer
unreimbursed expenses. Schedule A. If you dont itemize it wont matter.
Posted on 2/4/23 at 7:33 am to lsuwins3
quote:
If they are paying you for the miles you can’t write them off too.
They aren't paying me for miles. they are technically leasing my truck from me and then giving it back for me to drive.
as for itemizing the unreimbursed expenses, it doesn't matter on Federal due to my mortgage interest was so low before selling the house but it does make a big difference on state taxes. I ran it both ways and it yields me about 1200 dollars to use the mileage.
Posted on 2/4/23 at 4:23 pm to Warfarer
quote:times your marginal tax rate. You're saving a few hundred bucks by claiming it IF you itemized. If you don't, add it to sch A anyways so there is a track record of claiming unreimbursed expenses even though you couldn't use the deduction. Sets a precedence for claiming the it in the future
1200 dollars to use the mileage.
Posted on 2/4/23 at 5:46 pm to Warfarer
I don't always recommend a CPA, but this is the exact type of issue you need to see one about immediately.
Its worth the $300. Just do it.
Its worth the $300. Just do it.
Posted on 2/4/23 at 7:28 pm to Warfarer
quote:
They aren't paying me for miles. they are technically leasing my truck from me and then giving it back for me to drive.
AKA paying for your mileage
You’re not going to like the answer. But everybody has heard this story 80 different times and it always turns out you’re getting reimbursed for mileage. Doesn’t matter if it’s a set payment every month.
Also doesn’t really matter for you anymore. Employees can’t take unreimbursed business expenses.
This post was edited on 2/4/23 at 7:38 pm
Posted on 2/4/23 at 7:37 pm to Warfarer
quote:
If I file using miles, is this going to red flag me for an audit and am I doing this incorrectly?
I’m not really clear on what you’re asking but you’re not supposed to deduct the auto expenses in your case anywhere. You’re a W2 employee and there is no deduction currently for employees (use to be on sch a).
If they gave you a 1099 for the auto allowance you could, but not with it being on your w2.
Sorry, I see you’re specifically asking about deducting on AL. If AL allows it, I’d do it. You can put together a mileage log for your records supporting the deduction in case it’s ever questioned.
This post was edited on 2/4/23 at 9:04 pm
Posted on 2/4/23 at 8:54 pm to Weagle25
quote:
You’re not going to like the answer. But everybody has heard this story 80 different times and it always turns out you’re getting reimbursed for mileage. Doesn’t matter if it’s a set payment every month.
It's not a matter of not liking the answer. I just don't want to do something that costs me more in penalties but I also didn't want to leave money on the table by not taking if I can.
Like I said, this isn't a matter for Federal because I'm using a standard deduction anyway, where it matters would be on the Alabama state taxes.
Posted on 2/5/23 at 8:38 am to Warfarer
You can't double dip on auto expenses. They pay you to maintain and use the vehicle for work. That nullifies you writing off the mileage.
Posted on 2/5/23 at 10:01 am to Warfarer
Well 1. You can’t take it for reasons I’ve listed above.
2. When you say the difference is $1200, I’m assuming you’re saying the deduction will be about $1200. Which would result in a total savings of $60 maximum. And thats ignoring that you have to reduce that amount by 2% of your AGI.
So in reality we’re talking pocket change here.
2. When you say the difference is $1200, I’m assuming you’re saying the deduction will be about $1200. Which would result in a total savings of $60 maximum. And thats ignoring that you have to reduce that amount by 2% of your AGI.
So in reality we’re talking pocket change here.
Posted on 2/5/23 at 10:09 am to Weagle25
quote:
2. When you say the difference is $1200, I’m assuming you’re saying the deduction will be about $1200. Which would result in a total savings of $60 maximum. And thats ignoring that you have to reduce that amount by 2% of your AGI.
So in reality we’re talking pocket change here.
No. I'm saying that it means a matter of getting back 1400 or 200 from state. 40000 miles at .55 or so is a chunk of change. That's why I mention I don't want to leave money on the table. I've never really understood how they do this auto lease but they have been doing it for years so it is legal and works. I'm going to contact the office and talk with them for a few minutes and ask them tomorrow to make sure I'm not missing anything. Otherwise, I'll plan on leaving the truck stuff off my taxes.
I appreciate you guys taking the time to help me out. Like I said, this is so weirdly obscure that I wanted to get another opinion on it.
Posted on 2/5/23 at 10:15 am to Warfarer
quote:
40000 miles
That’s just business miles and doesn’t include your daily commute?
Posted on 2/5/23 at 11:01 am to Warfarer
Do you have a lease agreement? Otherwise it’s just a car allowance which is to cover all related expenses including fuel? Again, you want to double dip which isn’t allowable.
Posted on 2/5/23 at 1:21 pm to Weagle25
quote:
That’s just business miles and doesn’t include your daily commute?
Yeah. I live 2.3 miles from my official office so I only put on about 5 miles a day to the office. I put 47k on my truck last year.
Posted on 2/5/23 at 2:08 pm to Warfarer
quote:
(1) Expenses paid or incurred by the taxpayer in connection with performance of services as an employee and reimbursed by the employer are allowable as an adjustment in computing adjusted gross income. (2) Expenses paid or incurred by the taxpayer in connection with performance of services as an employee and not reimbursed by the employer are allowable as a miscellaneous deduction, if the taxpayer itemizes deductions, and are subject to the two-percent floor on miscellaneous itemized deductions.
LINK
Sounds like you’d put up to the amount that is included in your wages, as an adjustment. Any expenses you have in excess (unreimbursed) would be on sch a, if you itemize, it says.
I would check the current year’s form instructions.
This post was edited on 2/5/23 at 2:44 pm
Posted on 2/5/23 at 3:58 pm to Warfarer
Do you keep track of the miles? If so, the company should reclass those miles a reimbursement and not include on your w2.
Posted on 2/5/23 at 9:15 pm to Warfarer
quote:
They aren't paying me for miles. they are technically leasing my truck from me and then giving it back for me to drive.
The main question is this: Is this "lease payment" or whatever you want to call it, actually included in your Box 1 wages on your W-2?
If it is, then you can write off mileage expense. As you are aware, this is no longer allowed for federal taxes, but it is allowed in a few states, AL being one of those states.
If you are not being taxed on this payment, then you can't write of your mileage. Becuase in this case, the company is essentially providing you with a company paid vehicle.
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