topic Is it better to itemize mileage for work travels or take the reimbursement checks? in Deductions & credits

Is it better to itemize mileage for work travels or take the reimbursement checks?

nicras — Sat, 01 Jun 2019 01:44:00 GMT

How exactly are you being reimbursed? Taxable or non-tax...

Opus 17 — Sat, 01 Jun 2019 01:44:01 GMT

How exactly are you being reimbursed? Taxable or non-taxble. What rate.

How would I find out?

nicras — Sat, 01 Jun 2019 01:44:02 GMT

How would I find out?

Ask your employer.

Opus 17 — Sat, 01 Jun 2019 01:44:03 GMT

Ask your employer.

It was added to my gross but not federally taxed...

nicras — Sat, 01 Jun 2019 01:44:05 GMT

It was added to my gross but not federally taxed...

so....what do I do with this knowledge?

nicras — Sat, 01 Jun 2019 01:44:06 GMT

so....what do I do with this knowledge?

You framed the question as if you had a choice, but if th...

Opus 17 — Sat, 01 Jun 2019 01:44:08 GMT

You framed the question as if you had a choice, but if the reimbursement was already paid, its a done deal.

The rules are this: if you are reimbursed for work expenses with tax-free money, you can't also take a tax deduction--you can't deduct the expenses from your income because the reimbursement was never in your income. If the reimbursement is less than your qualified tax deduction would be, you can deduct the difference. You can report your mileage using the standard mileage method which is I think 54 cents per mile for 2016. Then a few screens later turbotax will ask for any non-taxed reimbursement, enter the amount there. If there is a remaining deduction, it will be applied to form 2016 as a schedule A itemized deduction. But since this is subject to the 2% rule, your actual tax benefit will be limited based on your other tax facts.

In a nutshell, if you were reimbursed at 40 cents per mile, you can take an additional deduction for the remaining 14 cents, subject to the 2% rule. If you were already reimbursed at the full rate, there is nothing you can deduct. (And if you were reimbursed at more than 54 cents per mile, the excess is taxable income.)

If the reimbursement was added to your taxable income in box 1 of your W-2, you can take the full deduction against the taxable income.

In the future, if you have a choice between tax-free reimbursement and a tax deduction, the reimbursement will almost always be better because of the 2% rule.

https://ttlc.intuit.com/questions/2902781-what-is-the-2-rule

yes...I wanted to know what to do for next year...so soun...

nicras — Sat, 01 Jun 2019 01:44:12 GMT

yes...I wanted to know what to do for next year...so sounds like I will take the reimbursement again. "If the reimbursement was added to your taxable income in box 1 of your W-2, you can take the full deduction against the taxable income."...<---how do I do that? It was added to my taxable income...

---I am sort of confused. The checks were not taxed when...

nicras — Sat, 01 Jun 2019 01:44:12 GMT

---I am sort of confused. The checks were not taxed when I received the reimbursement....but they were added to my gross income....make sense?

Not really. My employer lists reimbursements on my pay s...

Opus 17 — Sat, 01 Jun 2019 01:44:15 GMT

Not really.  My employer lists reimbursements on my pay stubs each month (probably for record keeping) but they are not included in box 1 wages on my W-2.  Do you actually have your W-2 yet?  It's too early for most businesses. You may be confusing yourself by trying to use a pay stub.

If the reimbursements were added to box 1 wages on your official W-2 then you will be able to deduct your expenses.  Were they also added to box 3 and box 5?

As a separate but related issue, reimbursements are only non-taxable with an "accountable" plan, where you submit mileage records and other receipts and you only get reimbursed for expenses that you prove with records and receipts.  If you don't submit records, or your employer pays a per diem and doesn't require proof, then that is a non-accountable plan and it must be taxed.  Then you deduct your expenses against that taxable income.

I assumed from other things you said that you have an accountable plan--if your employer is adding reimbursements to your box 1 W-2 and you have an acceptable plan, he's doing it wrong, or at least unnecessarily.  But you can deduct expenses against taxable reimbursement, just not against non-taxed reimbursement.

Do you have your W-2 yet?

yes...I have my W-2.

nicras — Sat, 01 Jun 2019 01:44:17 GMT

yes...I have my W-2.

So I talked to finance yesterday and this is what they sa...

nicras — Sat, 01 Jun 2019 01:44:19 GMT

So I talked to finance yesterday and this is what they said:

ME - Do you know if our monthly reimbursement is part of/added into our Income on our W2?

Finance - It depends on what the earn code is. Attached is a list of earn codes used. However, I highlighted the earn codes you are looking for and they will also tell you if it is added to gross and/or subject to taxes. (“Subj FWT” = Subject to federal withholding tax).

In review it appears that some reimbursements were added to my gross but weren't taxed...and some were added and taxed...

What a mess. You don't need to deduct your expenses, you...

Opus 17 — Sat, 01 Jun 2019 01:44:19 GMT

What a mess. You don't need to deduct your expenses, you got some reimbursements tax free and some taxed. If you want to try and deduct your expenses, enter all your work expenses (that you can prove with mileage records, receipts etc.) and then when you are asked about non-taxed reimbursements, enter that amount which will be subtracted from the deduction. You will end up with whatever remaining amount is legally deductible.

I know...it sucks!! I have such a headache.....I might...

nicras — Sat, 01 Jun 2019 01:44:22 GMT

I know...it sucks!! I have such a headache.....I might just skip this... I hope it doesn't cost me too much! :( Advice for next year?