I use my personal vehicle for my S-Corp. Can I deduct prorated vehicle expenses (based on mileage) or can I reimburse myself for business mileage based on the IRS rate?

[JulieR]

Are you receive compensation as an employee of the S-Corp?

[joemalone1967]

No,  I take periodic distributions.

[JulieR · Accepted solution]

Since you are both the owner and the operator of a car used for company purposes, your best bet is to:

1. Report all your auto expenses/mileage to the S-Corp. Since the S-Corp doesn't own the car, it can't take the standard mileage deduction and you can. 

2. The S-Corp should then reimburse you, directly, at the standard mileage rate. That way the expense will be recorded on the S-Corp books. In 2018 this rate has increased to $0.545 per mile. 

Please comment if you need additional information.

[joemalone1967]

Thank you for the quick response.

[dmkelly1968]

I am also in this situation.  Started S Corp for a mobile notary.  I thought I would have to reimburse myself out of corp funds but not sure if that is the best course.  Can I still take the deduction on my personal return if I do not itemize? DMP

[Anonymous_]

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@dmkelly1968 wrote:

I am also in this situation.  Started S Corp for a mobile notary.  I thought I would have to reimburse myself out of corp funds but not sure if that is the best course.  Can I still take the deduction on my personal return if I do not itemize? DMP

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You could not even if you did itemize. Tax reform eliminated virtually all miscellaneous itemized deductions for individuals who are employees and you are, technically, an employee of your S corporation.

Note that you could take a deduction if you were a sole proprietor (Schedule C business).

[dmkelly1968]

So really my only option is to reimburse myself mileage from the s corp and expense that on the scorp return.

Thanks again!

[dmkelly1968]

This is what I was told by a different CPS but not exactly sure what he means.  Sounds to me like you just said this is not an option.

Donna,

If it were me, I would take the standard business mileage deduction - simply multiply your business mileage by $0.58 per mile (this is the 2019 rate). You may also deduct 100% of the business tolls and parking incurred in the business.

Be sure to keep a mileage log, either paper or electronic, in the event of an audit.

[Anonymous_]

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@dmkelly1968 wrote:

This is what I was told by a different CPS but not exactly sure what he means.  Sounds to me like you just said this is not an option.

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Perhaps the CPA did not fully understand the situation (i.e., that you had an S corporation, not a sole proprietor who reports on Schedule C).

Reimbursement would appear to be your best, and only, option.

[dmkelly1968]

Thanks again!  That' what I thought.