I have a friend that uses her vehicle for work. Last year she put in approx. 12K miles on her vehicle just driving clients. She did not claim this on taxes. I told her that she could have claimed that on taxes and could have received back $$$$. I believe that the government pays 54 cents per a mile, in theory could she have received 12K x .54 = $6480 in addition to her regular return ??? Thank you for any info and help. God Bless

I don't think the government "pays" you 54 cents. You can deduct that amount from your income (if not reimbursed by an employer) and not pay tax on it.

Yeah the government definitely doesn't pay you 54 cents a mile.

From what I am reading unless I am wrong, it says 54 cents a mile here. Please correct me if I am wrong. God Bless

https://www.irs.gov/newsroom/2...and-moving-announced

From the link:

quote:

The Internal Revenue Service today issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

A deductible isn't a reimbursement. I don't get my entire property tax reimbursed from the government. I just don't have to pay income taxes on that money.

quote:

The Internal Revenue Service today issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

She can deduct her mileage on her income. She will not get that money from the government. She certainly should be deducting her milage though.

You can keep track of actual expenses or claim the allowed rate, but you had better have detailed records of rates, mileage and business purpose, because that is an “audit me” favorite.

I had a partner go through an audit several decsdes ago trying to show his business miles. I haven’t claimed a cent of business use since.

quote:

Originally posted by JALLEN:
You can keep track of actual expenses or claim the allowed rate, but you had better have detailed records of rates, mileage and business purpose, because that is an “audit me” favorite.

I had a partner go through an audit several decsdes ago trying to show his business miles. I haven’t claimed a cent of business use since.

this

she would need to keep a daily log detailing precise miles for business and personal

it's tedious but worth it if you drive a personal vehicle un-reimbursed by your employer.

as others have stated - its a deduction - not a payment / credit

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I think the bigger issue is why her employer is not reimbursing her already. That's a heck of a lot more than an incidental run to pick up donuts once a month.

An employees use of their personal vehicle for business purposes is an employee business expense reported on form 2106 which then flows to Schedule A as a miscellaneous itemized deduction. Those miscellaneous ITM deducts are subject to a 2 percent of AGI haircut - IOW the first 2 percent of AGI for those items you eat. So, potentially there is a deduction available and this presumes that the person can itemize. As others have stated it is a deduction not a credit so the value in tax saving would equal the amount deductible times the persons marginal tax rate. And, for 2018, with the new tax law, these deductions have been eliminated completely.

quote:

I told her that she could have claimed that on taxes and could have received back $$$$. I believe that the government pays 54 cents per a mile, in theory could she have received 12K x .54 = $6480 in addition to her regular return

Pale Horse explained what most people don't understand about taxes. When you "write off" an expense you're simply not paying your ordinary tax rate on that expense.

So in your example, let's say she was in a 15% tax bracket. That deduction would have eliminated $972 in liability to the government.

Or to explain in numbers...

Without claiming the mileage, I have $50,000 taxable income.

I did 10,000 miles at .54/mi = $5,400 as an additional allowable deduction


A deduction reduces your taxable income, a tax credit is reduction of taxes owed. Two very different things.


$50K taxable at 25% is $12,500 tax bill

$50K taxable minus a $5,400 deduction is $44,600 taxable. At same 25% rate, it would be an $11,150 tax bill making the deduction “worth” $1,340


Of course this only works if there are enough total deductions that they can itemize to overcome the “standard” deduction.


If you had a $5,400 tax credit it would reduce that $12,500 tax bill to a $7,100 tax bill

quote:

Originally posted by Sailor1911:
An employees use of their personal vehicle for business purposes is an employee business expense reported on form 2106 which then flows to Schedule A as a miscellaneous itemized deduction. Those miscellaneous ITM deducts are subject to a 2 percent of AGI haircut - IOW the first 2 percent of AGI for those items you eat. So, potentially there is a deduction available and <b>this presumes that the person can itemize</b>. As others have stated it is a deduction not a credit so the value in tax saving would equal the amount deductible times the persons marginal tax rate. And, for 2018, with the new tax law, these deductions have been eliminated completely.

^^^ All accurate

First question is, "Is VBVAGUY's friend self-employed?"
If so, then she has the option to deduct her mileage as an operating expense on Schedule C 'Profit or Loss from Business'. If she's someone's employee, then she has the option to deduct mileage as Sailor1911 explained above.

If she chooses to use her Standard Deduction rather than itemizing deductions on Schedule A, then the mileage deduction is moot. There are a lot of misconceptions regarding deductions. For instance, charities often advertise that donations to them can be deducted from income taxes. This only works if you use Schedule A, and if you do, it is not a dollar-for-dollar reduction of taxes owed.

If she chooses one of the methods above to claim mileage deduction, as JALLEN posted, she better be prepared to document 12K miles worth.

Before this gets too far, at this time, the rate 2018 is 54.5 cents/mile. Don't miss out on the $60.00 DEDUCTION by using the wrong rate...

The 2017 rate was 53.5 cents/mile. Don't use the wrong rate.

Hello everyone and thank you for your answers and information. It helps a lot. So for people that are in the same situation as her, what do you all use to record or show the IRS the mileage you have accumulated and used for work versus personal mileage ? Thanks again for any info. God Bless

quote:

So for people that are in the same situation as her, what do you all use to record or show the IRS the mileage you have accumulated and used for work versus personal mileage ? Thanks again for any info.

There's a variety of spiffy little books widely available that are easily used to keep daily entries of such expense. Stationary stores have usually a 1/2 dozen styles on hand. Staples etc have them from about $2 on up to $45 last time I was looking.

IF the employer gives any kind of transport $$ towards that expense, that too has to be accounted for, so that the "$20" he might put in towards a tank of gas, has to be logged as "income" rather than "expense".....

Sounds like a bigger deal than it really is, if one is used to accounting for such items as related to business.

I began using a large enough log I could enter names/places on a daily business along with miles that day and auto costs as well. At that time my personal car was used about 75% in business.

Years later with smaller business use, where maybe 15% was business vs 85% personal, far easier as I could log just those days/trips/expenses I was claiming rather than virtually all of the mileage.

quote:

Originally posted by signewt:Years later with smaller business use, where maybe 15% was business vs 85% personal, far easier as I could log just those days/trips/expenses I was claiming rather than virtually all of the mileage.

That's what I do. Log the business use. Beginning-ending miles. Add it up at the end of the year and subtract from the total vehicle miles during the same period.

Business mileage is a big discount she's missing.

There is an APP now for the phone that automatically tracks it for you and all you have to do is hit the APP on your phone for a small monthly fee. It's better to pay the fee in her situation and get the discount and the app records all of the specifics.

quote:

Originally posted by 911Boss:
Or to explain in numbers...

Without claiming the mileage, I have $50,000 taxable income.

I did 10,000 miles at .54/mi = $5,400 as an additional allowable deduction


A deduction reduces your taxable income, a tax credit is reduction of taxes owed. Two very different things.


$50K taxable at 25% is $12,500 tax bill

$50K taxable minus a $5,400 deduction is $44,600 taxable. At same 25% rate, it would be an $11,150 tax bill making the deduction “worth” $1,340


Of course this only works if there are enough total deductions that they can itemize to overcome the “standard” deduction.


If you had a $5,400 tax credit it would reduce that $12,500 tax bill to a $7,100 tax bill

You skipped over the 2% of AGI reduction for misc. itemized deductions. Assuming she's doing this for employer as OP described, not part of her own business.

As others have mentioned, any reimbursement she's getting from employer is a further reduction.

Wife and I claimed business miles for a number of years when we owned our business. We also leased a vehicle but still needed to use our personal cars for some business.

We kept track of miles in that at the end of each day, we'd log where we went that day and how many miles it was. Not indisputable proof but in council with our CPA we considered it "reasonable" and if the IRS challenged it, worse case we'd need to take some miles off. Never challenged in 20 years in business.

Unless there is some reason to be overly concerned about an audit, take all of the deductions that are legally afforded to you. Mileage is certainly one.