Tax Question: Work Vehicle
09-05-08, 04:17 AM
#1
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Tax Question: Work Vehicle
I use my car for work purposes and drive roughly 25,000 - 30,000 miles per year. My company gives me a car allowance of $650 plus gas for the vehicle that I pay for.
Since this car is used primarily for work purposes, would there be any tax incentive to lease it or finance it over time?
Since this car is used primarily for work purposes, would there be any tax incentive to lease it or finance it over time?
09-05-08, 07:53 AM
#2
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Talk to your accountant. Since you're not self-employed (I don't think) I doubt there's any benefit to leasing/financing. And the $650+gas is taxable income I believe.
09-05-08, 11:07 AM
#3
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I really need to find an accountant. I have been doing it all myself up to this point but there is probably a lot that I am missing.
I hired a couple in the past but they didn't take any time to look at my current situation and they didn't deduct anything. That left a bitter taste in my mouth...
I hired a couple in the past but they didn't take any time to look at my current situation and they didn't deduct anything. That left a bitter taste in my mouth...
09-05-08, 12:43 PM
#5
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When I used my car for work purposes, lived in NY, worked in Jersey, when I did my taxes, I put my monthly car payment down multiplied by 12, every drop of gas was put down, every mile driven and every toll paid, I just added up every receipt/credit card statement, insurance was put down, maintenance was put down, Sirius was put down
considering I only listened to it in the car during work hours
tires, everything that was costing me on my car was written off.
considering I only listened to it in the car during work hours tires, everything that was costing me on my car was written off.
09-05-08, 02:14 PM
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09-05-08, 03:45 PM
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The extra 650 for the vehicle expense is just added income, a small perk to the job, I have friends who take public transportation and still get an extra amount to cover a car payment/expense
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09-05-08, 07:49 PM
#8
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I use my car for work purposes and drive roughly 25,000 - 30,000 miles per year. My company gives me a car allowance of $650 plus gas for the vehicle that I pay for.
Since this car is used primarily for work purposes, would there be any tax incentive to lease it or finance it over time?
Since this car is used primarily for work purposes, would there be any tax incentive to lease it or finance it over time?
If you want to lease, my advice is to first figure out a way to cut your annual miles in half, if possible..........and THEN lease.
09-05-08, 09:34 PM
#9
In a nutshell it works like this: Expenses - reimbursement = employee business deduction(or income). In numbers:
Expenses
Miles per year 30,000
Allowance per mile 0.585
Total expense $17,550
times say 90% work
exp/standard mileage rate $15,795
less reimbursement $7,800
Net expenses $7,995
Tax bracket 30%
Tax savings $2,398.5
You could use your actual expenses instead of the standard mileage rate but make sure you document all. You would have to come up with more then the $17,550 to come out ahead that way.Keeping a log of your business use is a must either way. The mileage rate is for the last 6 months of 08. It was .505 for the first 6 I believe.
Expenses
Miles per year 30,000
Allowance per mile 0.585
Total expense $17,550
times say 90% work
exp/standard mileage rate $15,795
less reimbursement $7,800
Net expenses $7,995
Tax bracket 30%
Tax savings $2,398.5
You could use your actual expenses instead of the standard mileage rate but make sure you document all. You would have to come up with more then the $17,550 to come out ahead that way.Keeping a log of your business use is a must either way. The mileage rate is for the last 6 months of 08. It was .505 for the first 6 I believe.
09-05-08, 09:54 PM
#10
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In a nutshell it works like this: Expenses - reimbursement = employee business deduction(or income). In numbers:
Expenses
Miles per year 30,000
Allowance per mile 0.585
Total expense $17,550
times say 90% work
exp/standard mileage rate $15,795
less reimbursement $7,800
Net expenses $7,995
Tax bracket 30%
Tax savings $2,398.5
You could use your actual expenses instead of the standard mileage rate but make sure you document all. You would have to come up with more then the $17,550 to come out ahead that way.Keeping a log of your business use is a must either way. The mileage rate is for the last 6 months of 08. It was .505 for the first 6 I believe.
Expenses
Miles per year 30,000
Allowance per mile 0.585
Total expense $17,550
times say 90% work
exp/standard mileage rate $15,795
less reimbursement $7,800
Net expenses $7,995
Tax bracket 30%
Tax savings $2,398.5
You could use your actual expenses instead of the standard mileage rate but make sure you document all. You would have to come up with more then the $17,550 to come out ahead that way.Keeping a log of your business use is a must either way. The mileage rate is for the last 6 months of 08. It was .505 for the first 6 I believe.
Let's say 30k mi. at 20mpg = 1500 gallons at $4 each is $6000.
So total then would be $13,800
Vs. $15795 tax calc deduction is
~$2K diff.
x 30%
tax savings now of only $600.
Still better than a poke in the eye, but not that great.
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