AboutHelen P. O`Planick, EA Expertise I am a tax professional, with experience in individual taxation. I would prefer not to answer questions about non-resident aliens or corporate taxation. Please do not ask me state related questions, unless the state is Pennsylvania. There are 42 taxing states and 42 TOTALLY different sets of state tax law.
Experience I have been preparing tax returns almost all my life. I have been in professional practice for 25 years and I am enrolled to practice before the Internal Revenue Service.
Organizations National Association of Enrolled Agents
Publications I am a prior Money Magazine Tax Test taker and have been quoted extensively in all media including monthly periodicals and books by tax authorities.
Question QUESTION: i have a s corp and currently use my car 80% for business and 20% for personal. i have about $1200 in car expenses (oil, gas, insurance,etc) which i charge my credit card. i already paid my business credit card with money from my business checking account. my friend argued that what i am doing is wrong. he says i wont be able to take the mileage approach at the end of the year since i already paying the expenses. he also say i shouldnt pay in full since only 80% is deductible. is this true? can i take the mileage approach even though i am paying the expenses now? should i pay the expenses in full? can you explain?
ANSWER: You are an employee of your S-Corp. If the S is paying the bills, you have taxable income of the 20% personal.
If you have a reimburseable plan, and you don't let the S-corp reimburse you, you cannot write off the expenses.
It appears to me that you have income of the 20% personal use of the vehicle.
Helen, EA in PA
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QUESTION: i see. so what you suggest is for me to pay 80% of the expenses with money from my business account and the other 20% with my personal account. correct?
Answer Your S-corp should have an accountable plan and you should submit an expense report and the S should reimburse you for the plan. And of course you have a log book showing the business expense....this is a VERY hot spot for the IRS right now.
