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which to take - actual cost, or federal allowance?
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Posted by plant.babies Zone 8-9 .... maybe (gw:plant.babies) on Mon, Jul 31, 06 at 15:13
| I am trying to decide about Travel business costs. I guess I have two different questions. I do not fully understand.
For example, I know the standard federal deduction is .445 at this time. That means I multiply my miles by .445, and that is a travel deduction.
Can I ADD the cost of the gas I bought and car maintenance to this figure, or is this figure supposed to cover all Travel deductions by itself?
Logic tells me that my 'actual costs' are higher.
Can someone give me guidelines from their own experience as to which is generally the better deduction?
actual costs
versus
current federal travel deduction at .445
thanks, |
Follow-Up Postings:
RE: which to take - actual cost, or federal allowance?
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| The federal figure is supposed to cover all your gas and maintenance expense, you aren't allowed to add on. It's a lot easier that way and a reasonably fair figure to use. |
RE: which to take - actual cost, or federal allowance?
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Remember I mentioned time to talk to an accountant...
And Watergal is correct. And knowledgable accountant can show you more deductions... |
RE: which to take - actual cost, or federal allowance?
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| Well, your actual costs might be higher, but the .445 is sure easier to figure, especially if you do any "personal" driving on that vehicle. Otherwise, you have to figure out which part of the insurance, maintenance, car payment is for the personal driving and which part is for the business driving. Sounded like too much of a hassle to me! |
RE: which to take - actual cost, or federal allowance?
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| Not exactly my area but - - I think the mileage figure is supposed to be used for the use of a personal vehicle for business purposes. You can pay yourself from your business that amount, deduct on the business tax return and not include that amount in your income. Alternatively, you can not pay yourself and take the unreimbursed expense as a deduction on your personal return, but the latter is probably less desireable but this is an misc. itemized deduction and not always available - last time I looked there is a floor of 2.5% of your AGI. The previous posters are correct, you shouldn't double dip by reiumbursing yourself for fuel and the use of a personal vehicle. Check me on this - there is probably a publication on the IRS website (IRS.gov) that explains this. |
RE: which to take - actual cost, or federal allowance?
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| I understand. I read all the IRS documents. I suppose the .445 deduction is much easier since I do use a personal vehicle for business trips, but at gas prices today I seriously do not think .445 covers the real costs of van use! d |
RE: which to take - actual cost, or federal allowance?
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| Up until recently, I had a panel truck used exclusively for work. My accountant told me that I could expense it either way by saving the actual receipts of fuel, repairs and insurance,......... or using mileage. I tallied the receipts of course and then we figured it out both ways and used whichever was most generous. But, it is understood you cannot double dip. If I took mileage the rest of it, including that part of my business insurance covering vehicles could not be used as a basis for deductions. |
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