S-Corp Accountable Plan - Questions regarding home & vehicle expenses

[anothertaxuser]

Hi,

I am operating a small business S-Corp with 2 members. I plan to have an accountable plan for deducting my home office and vehicle expenses. I am not clear on a few things and hoping to get those cleared up quickly.

1. While setting up an accountable plan, can I submit and reimburse all expenses at the end of the year? 
2. Also, I bought a personal vehicle which I use for business as well. Assuming I have around 70% business use, I plan to use the actual expense method as I expect it to be bigger than standard mileage. Should this be reimbursed as part of the accountable plan as well?
3. If so, how should I calculate the depreciation and add it to the accountable plan? 
4. For home office expenses, should I be collect and store my utility bills, property tax bills for recordkeeping as well?

Thanks in advance.

[AmeliesUncle · Accepted solution]

1) No, it must be done in a "reasonable period of time".  See link below for that definition.

• https://www.irs.gov/publications/p463#en_US_2024_publink100034114

2) Yes.  However, even though your first year deduction will be larger using Actual Expenses, you'll want to analyze if that is your best option for the long-term (if you start off using Actual Expenses, you can never switch to the Standard Mileage Rate for that vehicle).  In many cases, the Standard Mileage Rate ends up with a better long-term deduction over the years.  But of course things vary from person to person depending on their specific circumstances.

• As a side note, be sure you check if your vehicle insurance properly covers your vehicle.  In many cases, you may need a commercial insurance policy to cover your vehicle.

3) That is a bit more tricky.  Somewhere in the program is a worksheet that projects your future depreciation, or you could use an online calculator.  Then take that full-year, full-business depreciation amount and each month factor in your business percentage and using 1/12 of the year.

4) Yes.

[anothertaxuser]

Thanks @AmeliesUncle for your reply. 

In this case, I should not claim any home office expenses except the month of December including utilities, cell phone, internet expenses. Is this accurate?

For vehicle deprecation, I am still not clear if that needs to be part of accountable plan or should that be directly filed at tax time.

[AmeliesUncle]

Accountable plans usually need to be submitted within 60 days of the expense, so whatever office expenses qualify during that time period can go under an Accountable Plan.

Depreciation can be part of an Accountable Plan.

As a side note, it is my strong opinion the people should do corporate returns by themselves.  There are too many things to mess up, and DIY programs like TurboTax only cover the basics.  It can be expensive, but in my opinion the corporate tax return should be prepared by a tax professional.

[anothertaxuser]

Thanks again @AmeliesUncle . What I don't get is how can depreciation be calculated and added to accountable plan within a 60 day window? And what does Form 4562 mean in this case?

[AmeliesUncle]

As my original comment indicated, reimburse 1/12 of the annual depreciation per month under the Accountable Plan.

Form 4562 does not apply because the corporation is reimbursing, not directly claiming depreciation.