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New Member

I have an S-Corp. How should I deduct business mileage?

I have an S-Corp. I use my personal car for business If I do not reimburtse myself for the expense, milage, how can I deduct this cost from my income? Must I writge myself a check to deduct the milage?"

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Alumni
Alumni

I have an S-Corp. How should I deduct business mileage?

You do not need to write yourself a check.  You can deduct the mileage or percentage of actual expenses on your own return as a employee business expense the same as any other employee.

Alternatively, the S-Corp could reimburse you and deduct the reimbursement.  If done at the Government mileage rate for only business miles, it wouldn't be shown on your return.  If reimbursed under some other method, you would report the expenses reduced by the reimbursement.

One thing that you can't do is let the S-Corporation claim the mileage, as the S-Corporation doesn't own the car.

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New Member

I have an S-Corp. How should I deduct business mileage?

Is a deduction on my personal 1040 limited to amounts over 2% of personal income as suggested by TaxGuyBill? If we claim the deduction on the 1120, must the corporation show a check or other receipt for the payment. The corporation may not have adequate cash here at year's end, to pay for all mileage accrued over the year. Can the corporation offer me something like a debut memo or an IOU, in the short term. The corporation operates on a "cash" basis.
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Alumni
Alumni

I have an S-Corp. How should I deduct business mileage?

You do not need to write yourself a check.  You can deduct the mileage or percentage of actual expenses on your own return as a employee business expense the same as any other employee.

Alternatively, the S-Corp could reimburse you and deduct the reimbursement.  If done at the Government mileage rate for only business miles, it wouldn't be shown on your return.  If reimbursed under some other method, you would report the expenses reduced by the reimbursement.

One thing that you can't do is let the S-Corporation claim the mileage, as the S-Corporation doesn't own the car.

View solution in original post

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Level 7

I have an S-Corp. How should I deduct business mileage?

It is generally best to submit the mileage to the corporation and have the corporation write a check to reimburse you for the expenses using the Standard Mileage Rate.

If you claim the expenses as an employee of the corporation, they are limited to the amount OVER 2% of your income.  If you don't otherwise itemize your deductions on Schedule A, your deduction would further be reduced or eliminated.
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New Member

I have an S-Corp. How should I deduct business mileage?

For 2018 taxes employees do not get any expenses

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New Member

I have an S-Corp. How should I deduct business mileage?

This is incorrect. The deduction for unreimbursed employee expenses was revoked in TCJA except for a few categories of employment (Armed Force reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses).

If you own the vehicle personally you must reimburse.

https://www.irs.gov/publications/p529#en_US_2018_publink10003917

 

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Employee Tax Expert

I have an S-Corp. How should I deduct business mileage?

@PeterStonikas: The previous comments are older answers that related to tax years prior to 2018. They no longer apply, and your answer is correct going forward from 2018.

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New Member

I have an S-Corp. How should I deduct business mileage?

Thank you! I am forming an S Corp in 1/2020 and my biggest tax deduction has always been mileage as I travel approx. 60,000 miles per year for work. Should I also have the corp write me checks for supplies and other related business expenses? 

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Level 15

I have an S-Corp. How should I deduct business mileage?

who owns the vehicle, you or S-Corp if you I would recommend reimbursement checks.  If S-Corp here's what the IRS says.  for personal mileage, the cost (can use standard mileage rate) must be added to your W-2 along with gross up for FICA and Medicare taxes.  you can then deduct all vehicle cost on S-Corp.  Alternately to avoid payroll issues you can reimburse for your personal use.        contemporaneous  evidence of mileage regardless of who owns vehicle must be kept.   failure can result in a substantial disallowance if audited.  Don't forget you must tale a salary.     

In addition if you have health insurance - two things.  if the policy is in the name of the corp, then you must add it to your w-2 taxable wages (no fica or medicare taxes)  the S-Corp gets the deduction as part of your wages.  On your 1040 you then get a deduction for the SE Health insurance. IRS notice 2008-1,  failure to do this requires that the corp not take the deduction for your health insurance and no deduction of your personal return.       if the policy is in your name, the IRS requires that the S-Corp reimburse you.  then you proceed as above as if policy in name of corp.    

 

it is advisable to use a pro the first year.   they can guide you things that you may not be aware of that can affect both you and corp.  

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Level 1

I have an S-Corp. How should I deduct business mileage?

I wonder if this should be done monthly, quarterly, or annually when using the standard mileage rate? Or can the s-corp owner pick some frequency they prefer  and write themselves a check for the miles traveled in that period. For example at the end of the year writes one check to cover that year's mileage expenses?

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Expert Alumni

I have an S-Corp. How should I deduct business mileage?

Both of the following methods require expense reports from the employee.(Accountable Plan).

 

Actual expense reimbursement is not taxable to the employee if you follow your accountable plan and if employees return excess payments within a reasonable time. If the amount of the reimbursement is more than the IRS standard mileage rate for the year, the excess amount is taxable to the employee.

 

A mileage allowance up to the federal mileage rate is not taxable to the employee if you follow your accountable plan. The employee must pay tax on any payments over the IRS standard mileage limit and on any excess payments they don’t return.

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