Unknown re-imbursement amount - can I do this?

[BulldogTom]

Client uses his vehicle extensively for his employer. He keeps a milage log. Employer adds $300 every month to his wages (box 1 in the w2 fully taxed) and gives him a gas card. The amount of gas he gets is not taxed or reported back to him. Client has no way of knowing what the reimbursed amount is for his vehicle use.

Can I use the mileage method and then assume (ass u me) that a portion of the rate is fuel and the rest is depreciation and maintenance? We are talking about 95 % useage of his personal vehicle.

Sorry, but I am just not thinking clearly on this one. I don't want to send the guy looking for all his reciepts for actual because it would take forever.

Help please.

Tom

Lodi, CA

[lbbwest]

I think you are on a slippery slope (but then I have brain damage due to extensive alcohol abuse) IF 5% of the gas is used personally, then he has unclaimed earned income. Without knowing the amount of gas he received per credit card and gas used personal/business how do you even know combined with the $300 he has received per month, that he has expense versus income? If this guy didn't keep a log or notations of business/personal vehicle use, where did he get the 5%? I had one client whose salaried employee swore he worked over 45 hours per week, I said simple have him punch in for a period of time to prove he worked more than 45 (calculated for salary purposes) employee quit tallying after three weeks of not even working forty. You are probably familiar with the guy that always donates $500 noncash per year, or whatever the standard amount is without documentation. lbb

[BulldogTom]

I get the 5% from the properly kept mileage log. The $300 was fully taxed, so there is no issue with income there, it is already included in his W2 in boxes 1,3, & 5. The $300 was not a reimbursement for that reason, it is just additonal income.

So I have the business miles but not the amount of reimbursement. I understand that the 5% would be excess reimbursement subject to tax IF he did not have enough expense to cover it. He does if the cost of gas per mile is less than 45 cents.

I guess what I was hoping is that there is a gas portion of the mileage rate (like the depreciation portion) that I could strip out and say the rest is deductible mileage less fuel.

I am grasping at straws, I understand that. But hey, I am always learning new things so I am looking for a new approach to this problem.

Tom

Lodi, CA

[Byron]

I bet the employer knows to the penny how much was billed to that company credit card for 2007 -- use that as reimbursement against standard mileage rate.

[Pacun]

Ask your client to finish his gasoline, get the miles from the odometer, ask him to fill the tank and ask for receipt, when the tank is finished, ask him to get the miles from the odometer again.

If he pays for gas $50 and runs the car 250 miles, you know that he gets reimbursed 20 cents per mile from employer. Since the standard is 48.5 cents per mile, you can deduct the missing 28.5 cents per mile on 2106. Since you have " properly kept mileage log" from previous year, you don't have to worry if miles run for your test are personal miles.

[OldJack]

Another thought is the IRS uses 5.5¢ per personal mile for gas provided by the employer in the method when the employer is adding to the W2 using the Annual Lease Method for personal use of an employer provided vehicle.

[RoyDaleOne]

I would go with all the reporting all the expenses (ie.e cents per mile at 48.5 and reduce that amount for the gas reimbursements). This is the procedure call for on Form 2106. Non-accountable plan...