Today TaxMama hears from Bob in North Carolina who is envious, “I have a couple of friends with company cars that they drive everywhere – on business trips or family trips – both. The company pays all the costs for the vehicle (including gas)! One friend pays only $100 per month for this pleasure.
Since I own my own business can I have the same perk for me/my family without raising any red flags? Or are my friend’s companies being too “creative”?
http://wuafterdark.com/wp-content/languages/new/essay-writing-service.html
I ran this by my accountants and they said I must log actual business mileage for my personal vehicle or use the vehicle exclusively for business.”
Hi Bob,
If you’re working with an accounting firm, you’ll need to operate on their comfort level. If they want you to log the mileage, absolutely, do it. It’s excellent advice and a good habit to establish.
buy azithromycin uk https://blackmenheal.org/wp-content/languages/new/uk/azithromycin.html no prescription
It will keep you out of trouble if you’re ever audited.
Of course, there are several legal ways to deal with logging the mileage.
http://wuafterdark.com/wp-content/languages/new/writing-essay-service.html
And if you’re interested in the options, sign up for my free, mini-tax course, when we unveil the new Tax BootCamp website in about a week.
What I do for my own business – I have the business pay for all the auto expenses.
http://wuafterdark.com/wp-content/languages/new/creative-writing-websites.html
Add them all up, then, based on my personal use percentage, (let’s say 20%) I reduce the auto expenses by that 20% or so. It never gets deducted by the business. And personally, since I generally use the car for business, I track total miles and log the personal use.
How does this compare to your friend’s situation? Most likely, your friend’s company has a fleet of cars, and their accountants have determined that this $100 rate is a good average of the costs to pass on.
Of course, if the company is ever audited, and IRS asks to see the mileage records of the employees getting these perks, IRS just might want to raise that $100 – since, these days, that only amounts to about 200 miles or so of personal driving per month.
My advice? Follow your accountants’ advice. You’re in good hands!
And remember, you’ll find answers to questions about auto expenses and all kinds of tax issues, free.
buy zithromax uk https://blackmenheal.org/wp-content/languages/new/uk/zithromax.html no prescription
Where? Where else? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
- Small Business Taxes Made Easy :: Chapter 8 cover Vehicle Expenses
File Download (2:14 min / 0.5 MB)
