Can an scorp deduct auto expenses for a vehicle used by the scorp, but not owned by the scorp?
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No, an S Corporation can't deduct auto expenses for a vehicle that it does not own. However, the S Corporation can reimburse you directly for the vehicle expenses.
So, to clarify, in TurboTax business you just add up all the monthly lease payments, gas, parking, auto insurance that the employee (me) paid from personal checking account for the year, multiply that by the business use percentage, and put that into Vehicle Reimbursement Paid?
Then you just move the total from Business to Personal checking account and make sure the accountable plan can account for the percentage?
You have to have an accountability plan. In other words, you need to submit an expense account report periodically to justify the business use of the auto. Otherwise, you can end up being taxed on the reimbursement you receive from the company.
You can read more about this in IRS publication 463 as follows:
https://www.irs.gov/publications/p463
Right, I have a document that says I have an accountable plan. So using actual costs, I just multiple say 60% business use by all the itemized expenses, and that's a deduction that doesn't need to go on employee's W2. Right?
Thanks!
Correct. The employee should be submitting the expenses to the company (60% if that is the percentage), and the company reimburses the employee back, and it is not reported on the W-2 as wages. It is considered a reimbursable expense to the employee and the business gets the expense.
so if you could please clarify a bit more, when the S-corp reimburse the employee where does the s-corp put that expense (deduction)?
The S-Corp would deduct the expenses as part of the business return according to the type of expense i.e. auto expenses, supplies, office expenses, etc.
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