I seen that there is a new tax law that if you use your car for work purposes (running errands) you can use it as a tax deduction. my question is has anyone heard of this and the 44.5 cents a mile i get is not taxed, so can i still use it as a tax deduction?
2007-02-07 06:48:49 · 7 answers · asked by bbwg_hbic 2 in Business & Finance ➔ Taxes ➔ United States
If your employer is giving you 44.5 cents per mile you drive then you cannot take a deduction for the mileage. If you are not being reimbursed for the miles then you can take a deduction.
2007-02-07 07:02:49 · answer #1 · answered by glibby3 2 · 0⤊ 0⤋
Nothing new with that, the Employee Business Expense deduction has been around for decades.
However, if your employer pays you the IRS rate for the year (44.5 cents) the whole thing is considered a wash; no reporting is required and you do not need to file Form 2106 with your return. The reason for this is that you are only entitled to deduct unreimbursed expenses. If you are paid the IRS rate, you are considered fully reimbursed and do not Nerd to report anything even if you turn a profit on the cost of using your vehicle.
2007-02-07 15:05:35 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋
That's basically true. Here's how it works: You have to file an IRS Form 2106 to get the deduction, and you must have documentary evidence to show that you used your own private vehicle to run errands. If you file vouchers with your company to get the 44.5 cent per mile reimbursement, your check stubs from those payments is what you need to file as documentary evidence. The tax break you're getting is for wear and tear on your privately owned vehicle, so it doesn't matter if your mileage vouchers are taxed or not. Also, if you are a reservist or guardsperson with the U.S. Armed Forces and have to travel over 100 miles one way to get to your duty station, you can also write off the trips you make back and forth from your home to your unit. For that, a copy of your point credit summary showing that you performed the duty will suffice as proof.
2007-02-07 15:01:20 · answer #3 · answered by sarge927 7 · 0⤊ 1⤋
If your employer is reimbursing you the 48.5 cents per mile (this went up for 2007) for using your car, then you cannot get the deduction for it, since the employer is reimbursing you (or should be) the standard mileage rate and not treating it as income to you. If they reimburse you, but are reporting it as additional wages being paid to you (you have to report it as taxable wages), then you can deduct it.
However, employee business expenses are claimed as itemized deductions which is subject to 2% of your AGI. This means
1. you have to itemize in order to claim it. If your standard deduction is greater than your itemized deductions, you would simply claim standard deduction and you lose the tax benefit of the mileage deduction, AND
2. you can only deduct the amount of employee business expenses that exceeds 2% of your adjusted gross income. The amount below 2% essentially goes away.
2007-02-07 15:27:04 · answer #4 · answered by jseah114 6 · 1⤊ 0⤋
No you can't deduct it if you are being reimbursed by your employer and aren't being taxed on the reimbursement. You aren't out anything, so there's nothing to deduct.
2007-02-07 21:24:22 · answer #5 · answered by Judy 7 · 0⤊ 0⤋
Yes but only if you itemize all deductions on Schedule A. If so use Form 2106 for auto expenses.
2007-02-07 14:53:31 · answer #6 · answered by spicertax 5 · 0⤊ 1⤋
Yes but not for commuting. Your employer should reimburse you for mileage.
2007-02-07 15:02:41 · answer #7 · answered by americanmalearlington 4 · 0⤊ 0⤋