How do I report my automobile expenses on my tax return? | TopBecause you are considered an employee of the Commonwealth of Virginia, all vehicle expenses are reported on Form 2106, Employee Business Expenses, Part II. Each section in this guide has a reference number that ties directly to Form 2106 to assist you in correctly reporting your automobile expenses as well as other unreimbursed business expenses. These expenses will be included on Schedule A, line 20, as unreimbursed employee expenses and are included with your other miscellaneous deductions. Expenses are deductible to the extent you're eligible to itemize total miscellaneous deductions. The expenses exceed 2% of adjusted gross income to be deductible. See IRS Section 162 (h) election for more information.
How much can I deduct for the auto mileage I incur traveling to and from Richmond? | TopThe Commonwealth of Virginia reimburses each legislator for one weekly trip to and from Richmond while the legislature is in session. If the reimbursement you receive equals your expenses, there is no effect on your taxable income. However, this is rarely the case. Special party caucuses or special committee meetings may require additional trips for which you are not reimbursed. Such unreimbursed mileage expense is tax deductible as an employee business expense on Form 2106. In every case when the deductible mileage expense and the reimbursements are not equal, you should report all mileage, both reimbursed and unreimbursed, on Form 2106. The reimbursement received from your employer are reported on Form 2106, Part I, line 7 and are treated as an offset to your total expense. See IRS Section 162 (h) election for more information.
What other automobile mileage expenses can I deduct? | TopMembers of the General Assembly incur a great deal of mileage expense while in their home district. All travel to mass meetings, and to meetings where you will speak or which you believe are important to attend because of your political position, are tax deductible. You should maintain a mileage log and record all business miles driven and for what purpose. This mileage can become substantial, particularly for those members who are responsible for large districts. The legislator may be required to travel from one town to another to attend civic functions, political functions or other meetings related to legislative duties. Include this expense in Part lI of Form 2106.
Can I deduct mileage expenses incurred while going to meetings during a political campaign for my re-election? I feel it is incumbent on me as a state legislator to attend these meetings to explain to my constituents the activities of the General Assembly, the legislation on which we are working, the disposition and explanation of legislation that has gone through committees, and legislation on which we have already acted. | TopThe Internal Revenue Code specifically states that all campaign expenses are not tax deductible (See section on campaign expenses). Because of this, it is very important for the legislator to distinguish between those expenses that are directly related to a campaign for re-election and those that are attributable to serving the constituency. Whether the expense is an election expense or business expense depends on the facts and circumstances. To avoid any conflict with the IRS, you might set up a time period to distinguish between campaign expenses and business expenses. For example, you might separate your campaign and business expenses by determining that campaign expenses include all expenses incurred during the month before the date of the nominating convention, primary election or general election. Record all expenses incurred during this time as non-deductible campaign expenses. Business expenses would include expenses incurred prior to this one-month period.
If I use another mode of transportation to get to Richmond, such as a train or plane, can I deduct these expenses? | TopIf you use a train, airplane or other means of transportation for an overnight stay in Richmond, these expenses should be detailed on Form 2106, Part I, line 3. Report the reimbursement you received for travel that were not reported to you in box 1 of Form W-2 on Part 1, line 7 of Form 2106. The expense incurred in excess of reimbursement will be deductible. However, any mileage reimbursement in excess of such travel expense will be taxable income to you. You cannot claim both the mileage you would have incurred had you driven to Richmond and the cost of the train fare or airline ticket.
Do I still claim a tax deduction for the mileage for that particular day, even though I did not drive my own car? | TopNo. In addition, if you do receive reimbursement for this mileage, the reimbursement amount is taxable income.
How do I report a reimbursement? | TopOn Part I, line 7 of Form 2106, you should report any amounts you received that were not reported to you in Box 1 on your Form W-2. This could include amounts that didn't appear on your Form W-2 at all, or amounts that appear under code "L" in Box 12 on Form W-2.
While away from home, staying in Richmond for the legislative session, I am required to drive to the state capitol each day. Can I deduct this mileage as a business expense? | TopYes. Although commuting miles are not considered business miles, if Richmond is not your "tax home," mileage between your temporary quarters and the State Capitol is deductible and is not considered commuting. See IRS Section 162 (h) election for more information.
Is a fine a tax-deductible expense? | TopNo. A traffic violation fine is a penalty and is not a deductible expense.
Can I deduct mileage expense from my home to my office? | TopNo. The mileage from your residence to place of business is a nondeductible commuting expense.
If the Commonwealth of Virginia reimburses me a lesser amount than the IRS standard mileage rate, can I deduct the difference on my income tax return? | TopYes. Show your total business mileage expense on Form 2106, Part II, Section B, titled "Standard Mileage Rate." The reimbursement is reported on Form 2106, Part I, line 7. The difference will result in an additional deduction.
The IRS allows me to deduct the standard mileage rate or to itemize all of my actual automobile expenses and then to take a portion of those expenses based on the percentage that my business miles are to the total miles traveled during the year. Which method results in the greatest deduction for me? | TopThe IRS suggests if you have the option of using either the standard mileage rate or actual expense method, you should figure your expenses both ways to find the method most beneficial to you. But when completing Form 2106, fill in only the sections that apply to the method you choose.
What if I am leasing my automobile? | TopA taxpayer who leases an automobile in connection with his or her trade or business may deduct the portion of the lease payments that are allocable to the business use of the automobile. In addition, operating expenses actually paid by a lessee-taxpayer may be deducted to the extent they are allocable to business use. Any advance payments made in leasing the automobile must be spread over the entire lease period. Payments made to purchase a car, even though denominated as lease payments, are not deductible. The taxpayer may have to include in income an inclusion amount, based on the lease payment. Consult your CPA. The deduction depends on the actual facts and circumstances.
What is the "Standard Mileage Rate?" | TopFor 2009, the standard mileage rate is 55.0 cents per mile for all miles of use for business purposes.
If I use actual expenses one year, can I use the standard mileage rate the following year? | TopThe IRS allows 2 methods for computing vehicle expenses — the standard mileage rate and the actual expense method. The standard mileage rate can only be used if: you owned the vehicle and used the standard mileage rate for the first year you placed the vehicle in service; or you leased the vehicle and are using the standard mileage rate for the entire lease period. Once you have used actual expenses, you must continue to use the actual expense for the remaining life of the vehicle.
If I use actual expenses, specifically what expenses am I allowed to deduct? | TopIn addition to gasoline, oil and lubrication, you may include the cost of repairs, tires, supplies, insurance, taxes, tags and licenses. The single largest item usually is depreciation, which also may be called "cost recovery" or "deduction under MACRS or ACRS" in IRS instructions.
What about the interest expense on my automobile? | TopInterest, even though incurred with respect to a vehicle used by you as an employee of the Commonwealth, is considered a personal expense and is not deductible.
If I use the standard mileage rate, are there additional expenses I can deduct for the use of my automobile? | TopYes. Parking fees, tolls and local transportation are reported on Part I, line 2, of Form 2106. Personal property taxes on the automobile are deductible as an itemized deduction on Schedule A, line 7, for the standard mileage rate or actual expenses. These taxes should be reported net of any "car tax" refund received in 2009.
Since I receive reimbursement from the Commonwealth for mileage allowance once a week to Richmond during the session, plus mileage reimbursement for special legislative committee meetings and other special committee assignments, would it be best to just disregard the reimbursement entirely, assume it is completely offset by mileage expenses and, therefore, not report anything? | TopIf business mileage records are maintained and you are fully reimbursed at the IRS rates for actual mileage driven, it is not necessary to report anything in your federal income tax return. However, if you are reimbursed for mileage not driven (for example, when you share a ride or if you do not attend a weekly session), then you have an excess reimbursement that must be reported as taxable income. If an employee incurs business expenses for which he or she is partially reimbursed, the employee must report all reimbursements and related expenses in order to be permitted to deduct the unreimbursed portion of his or her business expenses.
I bought a new car in 2009, do I get a sales tax deduction for it? | TopPurchasers of automobiles, motorcycles and trucks with a gross vehicle weight of no more than 8,500 pounds will be entitled to a deduction for state and local sales or excise taxes paid on purchases of vehicles between February 17, 2009 and January 1, 2010. The deduction is limited to the taxes imposed on the first $49,500 or less of vehicle cost. The deduction phases out for individuals with modified AGI in excess of $125,000 ($250,000 for married filing joint) and is not available if the taxpayer who itemizes deductions makes an election to deduct state and local sales taxes in lieu of state income taxes. Report on Schedule L and deduction should flow to 1040 line 40b or line 7 of Schedule A. |
