Mileage reimbursement for an owner/officer of an S Corp

Forum|Forum|6 years ago
January 29, 2020
1 reply
25 views

Is there a preferred method for reimbursing an S Corp shareholder/officer for business use of their vehicle? They have identified business, commuting and total miles driven. My understanding is that if reported on the S Corp return only actual expenses reimbursed to the officer can be claimed. Would it be best to claim $.58 per mile X business miles on their personal 1040?

Lacerte Tax

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Best answer by qbteachmt

I see you got no responses, so let's see if this helps.

You seem to be asking to do something that no longer exists (form 2106 is gone and Sched E doesn't apply):

https://www.tlnt.com/dont-let-your-people-be-surprised-when-they-cant-deduct-work-expenses/

You might also like to read the IRS literature, along with such blog posts from the web (always confirm the date so that you know this is post TCJA) as:

https://www.kitces.com/blog/accountable-plan-s-corp-owner-employee-deduct-business-expenses/

For Mileage, your client still has time to submit and substantiate to the corporation, and that is reimbursed at Allowance rates:

https://www.motus.com/mileage-deduction-tax-day-2020/

qbteachmtAnswer

Level 15

I see you got no responses, so let's see if this helps.

You seem to be asking to do something that no longer exists (form 2106 is gone and Sched E doesn't apply):

https://www.tlnt.com/dont-let-your-people-be-surprised-when-they-cant-deduct-work-expenses/

You might also like to read the IRS literature, along with such blog posts from the web (always confirm the date so that you know this is post TCJA) as:

https://www.kitces.com/blog/accountable-plan-s-corp-owner-employee-deduct-business-expenses/

For Mileage, your client still has time to submit and substantiate to the corporation, and that is reimbursed at Allowance rates:

https://www.motus.com/mileage-deduction-tax-day-2020/

Don't yell at us; we're volunteers

P

peauffAuthor

Level 3

Thanks, that makes sense. After further discussion with the client, a portion of the mileage does relate to managing a rental property out of state, so schedule E treatment would work. Also, a portion may relate to preparing a home for a "flip" sale. I agree whatever we do will have to relate to business income and not employee expenses via 2106.

qbteachmt

Level 15

2106 no longer exists. This: "and not employee expenses via 2106" means separating the S Corp mileage and turning that in for reimbursement. There is no deduction for it, because you get Reimbursed for it, and under an Accountable Plan, that reimbursement is not taxable. So, as one previous All Star posted to this community: you cannot write off what you did not write on. No Income involved, when it's Reimbursement per the Accountant Plan rules.

Yes, other mileages for other activities are Personal from the perspective of the S corp. Now that person handles the rest of their mileage per the other rules that apply to those other amounts.

"a portion of the mileage does relate to managing a rental property out of state, so schedule E treatment would work. Also, a portion may relate to preparing a home for a "flip" sale."

It seems your client has at least 2 other operations, separate from their S Corp activities, then. And commuting doesn't go anywhere in taxes for mileage allowances.

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