@clarityhealth wrote:
- Does this also work if your business is an S corp? I had someone else tell me that the RV would just be considered part of our home property, and only the office equipment/furniture we purchase would be a business expense. That didn't make sense to me if the RV is only used for our home office/business only. It is not a permanent structure on our property, and was purchase for business use.
Option 1.
The business buys the RV. The business can deduct ordinary and necessary operating expenses according to the rules in publication 463. If the RV is also available for personal use of the employee(s)--such as, remaining in the location of a job after the job is complete to do some camping--the fair market value of the personal use must be added to the employee's taxable wages (W-2 box 1, 3 and 5) and is subject to withholding of federal and state income taxes and social security and medicare tax. Assuming the RV is parked someplace that charges a nightly fee, that is also a deductible business expense and you would want to pay that with a business credit card. Food (meals) that are provided to the employee are a deductible business expense if you follow the rules for business meals. (Meals while traveling away from home on business may be covered by the employer up to the federal ME&I rate. Meals in excess of the ME&I rate are taxable income to the employee.)
Option 2.
The employee buys the RV. The business can reimburse the employee tax-free for business related use following an accountable plan, as described in publication 463. This will generally involve the employee keeping records of mileage driven, costs for fuel, maintenance, insurance, repairs and depreciation. The employee can submit a request for reimbursement based on the cost of specific business trips. (In other words, if the employee uses the RV 80% for business and 20% for personal use, they can only be reimbursed for 80% of their costs.). The employee can't use the IRS standard mileage rate method because this is not a passenger automobile. The employee can't be reimbursed for personal use of the vehicle unless that is included in their taxable income, which is why it is necessary to keep accurate records of business use including dates, miles driven, business purpose, and so on.
In addition to the cost of operating the RV, the employee can be reimbursed for food, parking fees, highway tolls, and overnight RV park costs, provided they are work-related and the employee provided adequate documentation (receipts).
If the business reimburses the employee for RV costs without adequate proof, that is a non-accountable plan, and the reimbursements must be included as W-2 taxable wages.
