Uh Oh.... Mileage is down with the IRS...

•53.5 cents per mile for business miles driven, down from 54 cents for 2016. Also I just learned that January 23 is when you can start filing. All this on the IRS.gov site...

Then I saw this: Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. How do you calculate that? Gas? Repairs? You can either do the mileage deduction but you can't do both.

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You can take depreciation and actual costs. Whichever one you choose, you cannot switch from one year to the next -- you must stay with the one you choose as long as you use that vehicle for business. And it can get messy, "recovering" claimed depreciation if/when you sell the vehicle. Mileage rate much simpler. BUT you must have records. I just keep a little notebook in the car and update the mileage every time I gas up. That's adequate proof for IRS.

(Basically, just ask yourself "does it cost me more than $0.535 a mile to run my car?" If so, you'll want to take actual costs as your business expense....and remember, it might cost you $0.65 a mile this year, but 3 years from now, it might be $0.24 a mile....but you are STUCK with actual cost, because that's what you chose when you started taking the deduction. Actual costs is a % of your car insurance, tires, oil changes, routine maintenance, etc., etc., etc. If you use the vehicle 100% for business, then 100% is deductible...........)

Edited 1 time(s). Last edit at 12/22/2016 05:14PM by ceasesmith.

Also realize that if you get gas or oil changes reimbursed by a shop those do not count as 'actual expense' for your vehicle without 'double dipping'. But yes, 'actual expense' is depreciation, insurance, tags, repairs, maintenance and you still keep track of miles because your business miles are a percentage of your total miles and that percentage is what you get to take of 'actual expense'. Parking and tolls for business use are separate from either miles or actual expense calculations and are deducted separately.

You EDIT-might be split the difference a bit to. You can do the millage deduction and then separate out repairs and some depreciation, so long as you don't add one to the other and had some records. I use my oil change and repair records. It helps to have software to help with all the tax issues as they cover a lot of the problem areas for you.

Edited 1 time(s). Last edit at 12/24/2016 06:27AM by weatherman2111.

@weatherman2111 wrote:

You can split the difference a bit to. You can do the millage deduction and then separate out repairs and some depreciation, so long as you don't add one to the other and had some records. I use my oil change and repair records. It helps to have software to help with all the tax issues as they cover a lot of the problem areas for you.

Sorry, but this is just bad advice. This type of skating around the rules made me crazy when I prepared taxes professionally. One of my friends did this on the advice of his CPA. He ended up mortgaging his paid for condo and had the credit rating from H E double hockey sticks for a solid 10 years.

Mileage went down this year, but we still get it. I never recommended my clients take depreciation, if they weren't saving the money to pay the gov't back when the major depreciated item was sold. I had clients that thought they could work real estate rentals When the properties sold, they didn't put aside the depreciation they took and were in debt for years.

I applaud weatherman2111 if you have figured it out. But please don't tell people it can be done, because 9.999 times out of 10 it can't.

Live your life in such a way that when your feet hit the floor in the morning; the devil shudders...And yells OH #%*+! SHE'S AWAKE!

MA Smith: How long does it take for you to do your taxes if you use an online Tax Program? Just curious! I want to set aside a few hours for this.

My online program saves my info for me and can port it in from other tax programs. I have two that I bounce between to be sure because every now and again one of them will catch something the other didnt and you don't have to pay until you wrap up. I can usually knock it out in an hour or two session with the pre-filled data but I take an extra hour to review and double check everything. If your taxes are complex, it may cost more and take more time. With one job, and then listing extra earned income without any dependents or marriage, my stuff is easy peasy.

MegglesKat

Did anyone get the email from Credit Karma that they are going to have a FREE online Federal & State efiling tax program this year?? I got the email earlier this week....wonder if it will be any good. Just thought I'd throw that out here to see if any others think it will be adequate for simple tax returns.

@guysmom wrote:

Did anyone get the email from Credit Karma that they are going to have a FREE online Federal & State efiling tax program this year?? I got the email earlier this week....wonder if it will be any good. Just thought I'd throw that out here to see if any others think it will be adequate for simple tax returns.

I signed up for it last night! They will be sending further info...

@SunnyDays2 wrote:

MA Smith: How long does it take for you to do your taxes if you use an online Tax Program? Just curious! I want to set aside a few hours for this.

If you're organized & no one interrupts you, maybe 2 hours with Turbo. If you haven't done them before I would count on around 4 hours. I say this because you really do need to think the questions through even with Turbo Tax. Interruptions from family stinks and this is when they need to be sent to have big fun for hours anywhere.

Send family out for big fun, interruptions is not a good thing even with Turbo.

The first time is the hardest.

When I used to do the family taxes, it took hours because my father hovered and constantly interrupted what I was trying to get done with the various schedules. This is the reason I finally said enough is enough and now we have a CPA. If he had left me alone 6 schedules plus the 1040 would've taken an hour.

Live your life in such a way that when your feet hit the floor in the morning; the devil shudders...And yells OH #%*+! SHE'S AWAKE!

You can go to [www.irs.gov] and if your adjusted gross income is $64,000 or less there are free on line tax programs available. These are going to be on-line and through the IRS rather than through a private provider. This should provide you with perhaps a safer repository for your personal data.

GSA says it's $0.54 as of January 1, 2016 to current. [www.gsa.gov]

$0.535 is for 2017 [www.irs.gov]

@MASmith is correct on approximate times. Generally you need a little time to at least eyeball whether itemized deductions make sense over the standard deduction. Contributions can be time consuming (one of the returns I do generally has between 200 and 250 separate contributions per year to all be typed in and identified appropriately). Sale of a residence, Schedule C, capital gains/losses, IRA contributions/distributions, specific purchases that may increase the sales tax deduction, there are a whole lot of situations that may increase the time needed or even a temporary halt while gathering additional information.

I would advise before saying anything about taxation, that if you say something you link the backup because if someone takes your advice, uses it (even if it's from an internet forum and you are not an expert) and is wrong, you will be held liable for their mistake. Source: 15+ years working in accounting and doing taxes.

Edited 1 time(s). Last edit at 12/23/2016 02:26AM by nixkit.

Not sure I saw this mentioned. If you itemize, you still need to track mileage. For example: if you put 10,000 miles on your vehicle of which only 1,000 were for mystery shopping then you can only use 10% of your costs.

My posts are solely based on my opinions and for my entertainment, contact a professional if you need real advice.

When you get in debt you become a slave. - Andrew Jackson

This is just so funny. It (the time to prep) will vary wildly; mostly based on if you've been keeping your records up to date all year. And if you don't have to leave the tax prep area to get up and go look for that piece of paper/receipt you "forgot" you needed.

As for me, when I sit down I will have already filled out the Schedule C (which I print off the IRS website for FREE) in pencil....so I will already have organized and totaled mileages, gross income from 1099's (and from companies I made less than $600), all business-related deductions, etc., etc.

However, my return is simple, and more complicated ones take longer. Mine takes 20 minutes, and that includes printing out a hard copy for me to keep on hand.

@MA Smith wrote:

@weatherman2111 wrote:

You can split the difference a bit to. You can do the millage deduction and then separate out repairs and some depreciation, so long as you don't add one to the other and had some records. I use my oil change and repair records. It helps to have software to help with all the tax issues as they cover a lot of the problem areas for you.

Sorry, but this is just bad advice. This type of skating around the rules made me crazy when I prepared taxes professionally. One of my friends did this on the advice of his CPA. He ended up mortgaging his paid for condo and had the credit rating from H E double hockey sticks for a solid 10 years.

Mileage went down this year, but we still get it. I never recommended my clients take depreciation, if they weren't saving the money to pay the gov't back when the major depreciated item was sold. I had clients that thought they could work real estate rentals When the properties sold, they didn't put aside the depreciation they took and were in debt for years.

I applaud weatherman2111 if you have figured it out. But please don't tell people it can be done, because 9.999 times out of 10 it can't.

Umm, ok? I ran everything through Turbo Tax this past tax season ad there wasn't a problem. Am I missing something? There was a deduction for millage, and a separate section for maintenance and depreciation on the car. They didn't seem to clash with each other.

TurboTax asks if you want to try it the other way to see if it brings a bigger deduction. Go back and look at your actual return printout. You will find it used one way or the other but not both. If last year was your first year for this business and you import last year's return before doing this year's you will find that TurboTax is smart enough to use the same handling of your vehicle for 2016 as it used for 2015 though the question will still be there whether you want to see if the 'actual' expenses gives you a bigger deduction than mileage. Just because the choice is there to try both does not mean that TT claims it both ways.

In that sense it is like itemized deductions. TT will always ask you the questions for itemized and once you have done all categories will tell you whether you would do better taking the standard deduction. A few folks need to take itemized even if the standard deduction would be better for them (for example, married filing separately where if one itemizes, both must itemize). TT will not allow you to itemize AND take the standard deduction.

Weatherman,
As usual, Flash is "spot on." You cannot take both and TT won't let you make that error.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

Ok. Well, it let me do something with the repairs along with the mileage deduction/reimbursement/whatever it is.

FWIW it don't make enough to itemize anything, so this is going along with the standard deduction and nothing else. Maybe that makes a difference?

Probably not. Your Schedule C is pretty much standing apart from the rest of the return, sort of like making biscuits to go with dinner. An exception is that if the health insurance provided by your business is more expensive than allowed, the balance will move to itemized.

@ceasesmith wrote:

This is just so funny. It (the time to prep) will vary wildly; mostly based on if you've been keeping your records up to date all year. And if you don't have to leave the tax prep area to get up and go look for that piece of paper/receipt you "forgot" you needed.

As for me, when I sit down I will have already filled out the Schedule C (which I print off the IRS website for FREE) in pencil....so I will already have organized and totaled mileages, gross income from 1099's (and from companies I made less than $600), all business-related deductions, etc., etc.

However, my return is simple, and more complicated ones take longer. Mine takes 20 minutes, and that includes printing out a hard copy for me to keep on hand.

I LOVE your idea about printing out the Schedule C and pre-fill it out. I will be new to Turbo Tax and nervous.... so any of bits of advice are appreciated. I tend to be the ":very prepared" type but since I have never done this TT before, I will try to get as much as I can ready.

"2016 was the year solar panels finally became cheaper than fossil fuels. Just wait for 2017"-Quartz

Edited 1 time(s). Last edit at 12/26/2016 11:05PM by DavePi.

@weatherman2111 wrote:

@MA Smith wrote:

@weatherman2111 wrote:

You can split the difference a bit to. You can do the millage deduction and then separate out repairs and some depreciation, so long as you don't add one to the other and had some records. I use my oil change and repair records. It helps to have software to help with all the tax issues as they cover a lot of the problem areas for you.

Sorry, but this is just bad advice. This type of skating around the rules made me crazy when I prepared taxes professionally. One of my friends did this on the advice of his CPA. He ended up mortgaging his paid for condo and had the credit rating from H E double hockey sticks for a solid 10 years.

Mileage went down this year, but we still get it. I never recommended my clients take depreciation, if they weren't saving the money to pay the gov't back when the major depreciated item was sold. I had clients that thought they could work real estate rentals When the properties sold, they didn't put aside the depreciation they took and were in debt for years.

I applaud weatherman2111 if you have figured it out. But please don't tell people it can be done, because 9.999 times out of 10 it can't.

Umm, ok? I ran everything through Turbo Tax this past tax season ad there wasn't a problem. Am I missing something? There was a deduction for millage, and a separate section for maintenance and depreciation on the car. They didn't seem to clash with each other.

TT may or may not catch everything. The rule is if you use mileage, you cannot use anything else, aka, oil changes, a new transmission, new tires etc. I've never ran mileage and upkeep through TT so I don't know if there is a glitch in the system.

I do know that it's better to run mileage if you're an independent contractor.

I mentioned what happened to the old boyfriend. What happened to my family when we moved from Florida to Texas, took about 3 years to get straight and it had nothing to do with federal taxes. Unfortunately the IRS did their best to hang us out to dry, because Florida was doing its best to grab money from us.

My advice is this...take what you can get, but don't push the envelope.

Download the C schedule and the information from IRS.gov. As I mentioned before I can't make heads or tails out of some of the rules for the schedule C. Read, read, read...take a nap and start reading again.

Live your life in such a way that when your feet hit the floor in the morning; the devil shudders...And yells OH #%*+! SHE'S AWAKE!

@MA Smith wrote:

@weatherman2111 wrote:

@MA Smith wrote:

@weatherman2111 wrote:

You can split the difference a bit to. You can do the millage deduction and then separate out repairs and some depreciation, so long as you don't add one to the other and had some records. I use my oil change and repair records. It helps to have software to help with all the tax issues as they cover a lot of the problem areas for you.

Sorry, but this is just bad advice. This type of skating around the rules made me crazy when I prepared taxes professionally. One of my friends did this on the advice of his CPA. He ended up mortgaging his paid for condo and had the credit rating from H E double hockey sticks for a solid 10 years.

Mileage went down this year, but we still get it. I never recommended my clients take depreciation, if they weren't saving the money to pay the gov't back when the major depreciated item was sold. I had clients that thought they could work real estate rentals When the properties sold, they didn't put aside the depreciation they took and were in debt for years.

I applaud weatherman2111 if you have figured it out. But please don't tell people it can be done, because 9.999 times out of 10 it can't.

Umm, ok? I ran everything through Turbo Tax this past tax season ad there wasn't a problem. Am I missing something? There was a deduction for millage, and a separate section for maintenance and depreciation on the car. They didn't seem to clash with each other.

TT may or may not catch everything. The rule is if you use mileage, you cannot use anything else, aka, oil changes, a new transmission, new tires etc. I've never ran mileage and upkeep through TT so I don't know if there is a glitch in the system.

I do know that it's better to run mileage if you're an independent contractor.

I mentioned what happened to the old boyfriend. What happened to my family when we moved from Florida to Texas, took about 3 years to get straight and it had nothing to do with federal taxes. Unfortunately the IRS did their best to hang us out to dry, because Florida was doing its best to grab money from us.

My advice is this...take what you can get, but don't push the envelope.

Download the C schedule and the information from IRS.gov. As I mentioned before I can't make heads or tails out of some of the rules for the schedule C. Read, read, read...take a nap and start reading again.

I'll keep that in mind for 2017. TT did say I was running a slightly higher than average risk of an audit, but I haven't had any issues so far.

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