Hello,
Our family has recently purchased two vehicles. Both will see a mix of pleasure, commuting, and use in service of my business. I am the sole shareholder and employee of this business, which is incorporated and has elected to file as an S corporation. Due to the diversity of business tasks I perform - a mix of long distance travel and heavy duty local work - we have decided it is more advantageous for us to own two diverse vehicles personally rather than have the business own one. This saves us from having to purchase commercial auto insurance and allows me to choose which vehicle to use on a given day or week based on my needs. My wife commutes a short distance in whichever vehicle I am not using. Both vehicles are reliable, purchased used cheaply for cash, and as fuel efficient as can be based on the tasks each performs.
Last year, when fuel was more expensive, our older cars were less fuel efficient, and I did less traveling, I paid for fuel using company money when I was conducting business using the vehicle and deducted this expense.
This year, I have over 10,000 miles of guaranteed business travel for which the client will pay my business the govt reimbursement rate (57.5 cents/mile). I will also log thousands of unpaid miles, I am sure. I am looking for the optimal legal way to get that travel reimbursement into my personal pocket.
Please note that we have always come out way ahead taking the standard deduction, so I don't think it will be advantageous for me to claim mileage on our personal tax return, even if the deduction totals over $5k I file an 1120s for the business.
Please comment on the appropriateness of my idea and provide feedback as helpful:
- Any mileage reimbursement received by the business flows through as a reimbursement to me personally
- Fuel for client-reimbursed business related travel is paid out of the business account (but not deducted). I still pay income tax on these purchases, but not payroll taxes.
-Fuel for unreimbursed business related travel is paid out of the business account and deducted
- I claim no personal deductions for any mileage or costs associated with maintaining or insuring either car. All maintenance and insurance is paid for personally.
FWIW, fuel cost at $2/gal is 5 cents per mile for one car and 12.5 cents per mile for the other.
Seems like buying fuel through the company is a gray area, but I hate to be on the hook for this expense personally if I can't get any credit for it, and I think I'm in the clear morally and legally as long as I don't deduct fuel purchases for which I was reimbursed by a client.