Question about claiming mileage with the IRS?

[brig2221]

My wife is a sales rep that has always had a company car along with a gas card provided to her.

That said, her company recently changed policies and now have removed all company cars, going with a direct compensation plan for vehicles.

She had two options. First was to choose a managed plan called the Runzheimer program. I'm sure many of you have heard of it. They manage it in such a way that the money you get it tax free.

The second option my wife had to was to take a lump sum of $825/month, that would be paid out along with her regular paycheck, and would be taxed accordingly. This is the plan we chose for a number of reasons.

That said, someone at her work seemed to think that because she was being taxed on the money she was receiving for driving her own vehicle on company time, that she could also claim mileage with the IRS in conjunction with receiving the money from the company.

I thought that you could not combine the two, and could only do one or the other.

I was curious if anyone knew for sure the rules on this situation. Thanks!

[sweeps]

I think your wife's co-worker is correct. I believe this qualifies as a non-accountable plan, meaning the company is not tracking your mileage -- instead they are giving you a certain allowance and adding it to your wages. Therefore, from Topic 510:

If your employer uses a non–accountable plan to reimburse you for the expenses, the reimbursements should be included in your wages. Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a non–accountable plan with your wages, salary, or other compensation and report the total on your Form W–2. Your employee business expenses may be deductible as an itemized deduction.

[brig2221]

Sweeps,

Thanks a lot for the info. That said, by reading your quoted text, I can't tell if they are talking about deducting the money being given to us through the company, or if we deduct business mileage?

[sweeps]

You could only deduct the actual mileage, not the amount of the allowance.

This is my interpretation anyway -- I'm not a CPA, so you may want to separately confirm.

[jIM_Ohio]

Originally Posted by sweeps

I think your wife's co-worker is correct. I believe this qualifies as a non-accountable plan, meaning the company is not tracking your mileage -- instead they are giving you a certain allowance and adding it to your wages. Therefore, from Topic 510:

If the $8xx per month allowance is less than $.485 per mile, I would think you could still claim the difference as unrembursed mileage on the income tax return.

[sweeps]

Yes, I agree Jim. My point was that you could not deduct more than your actual mileage, if the allowance exceeded that amount.

[jIM_Ohio]

Originally Posted by sweeps

Yes, I agree Jim. My point was that you could not deduct more than your actual mileage, if the allowance exceeded that amount.

My wifes company reimburses her $.41 per mile. At income tax time we claim the other .075/mile as an unreimbursed business expense.

I was suggested to take the $7xx benefit, divide by $.485, and compare that number (which is in miles) to the actual milage driven.

[sweeps]

Originally Posted by jIM_Ohio

My wifes company reimburses her $.41 per mile. At income tax time we claim the other .075/mile as an unreimbursed business expense.

I was suggested to take the $7xx benefit, divide by $.485, and compare that number (which is in miles) to the actual milage driven.

Sorry, but I don't understand that. Your wife's company either reimburses $.41/mile (probably an accountable plan) or it reimburses $7xx (probably a non-accountable plan). I don't understand the calculation/comparison you made.

If an employer gives a dollar amount without regard to actual mileage, that is fine... but it's just like wages. It has nothing to do with actual mileage driven. If the employee drives 10 miles that month, she deducts 10 miles. If she drives 10,000 miles that month, she deducts 10,000 miles. The allowance is irrelevant, if my understanding is correct.

[jIM_Ohio]

Originally Posted by sweeps

Sorry, but I don't understand that. Your wife's company either reimburses $.41/mile (probably an accountable plan) or it reimburses $7xx (probably a non-accountable plan). I don't understand the calculation/comparison you made.

If an employer gives a dollar amount without regard to actual mileage, that is fine... but it's just like wages. It has nothing to do with actual mileage driven. If the employee drives 10 miles that month, she deducts 10 miles. If she drives 10,000 miles that month, she deducts 10,000 miles. The allowance is irrelevant, if my understanding is correct.

The $7xx benefit was really $825 mentioned by
brig2221 in their OP.

So $825 looks good if milage was around 1700 miles/month. This does not take into account taxes.

If milage was 2000/month, I would suggest taking

$825/2000=$.4125

$.485-.$4125=$.0725. A person could them claim $.0725*2000=$145 as an unreimbursed business expense if a CPA suggests this is legit.

In out case my wife's employer only reimburses $.41, and also does not reimburse drives to airport, so we claim all airport trips and $.075 per mile on income taxes as unreimbursed business expenses.