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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28904
Experience:  Taxes, Immigration, Labor Relations
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My employer does not reimburse me for mileage but rather gives

Customer Question

My employer does not reimburse me for mileage but rather gives me an allowance of 250.00 per month which is taxed. I am driving around 1500 miles a month to various retaurants he owns. I am spending around 700.00 per month on gas and its killing me. He claims its 100% deductable on my taxes but what is that going to equal as far as money saved on my end. I make 43k a year including the allowance and I get around 8k a year in bonuses.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

LEV :

Hi and welcome to Just Answer!
Your employee business expenses are deductible.

LEV :

You need to itemize your deduction in order to take advantage.
You may choose either to deduct actual transportation expenses or deduct based on mileage.

LEV :

In your situation it might better to deduct based on mileage.

JACUSTOMER-dzwu8yay- :

i realize that I want to know if im basically saving the equal amount of money from being deducted in taxes at the end of the year. example i pay 8400.00 for gas and mileage throughout the year. does that mean i paid 8400.00 less in taxes?

LEV :

By deducting your expences - you reduce your taxable income.

LEV :

That is not a credit that goes against your tax liability.

JACUSTOMER-dzwu8yay- :

ohh okay so I make 43k a year so it reduces my agi by 8k

LEV :

I may estimate your deduction if needed.

JACUSTOMER-dzwu8yay- :

if thats possible I really just want to take this information to the table for re-negotating with him I cant afford this through the year

JACUSTOMER-dzwu8yay- :

i used the tax witholding calculator online but it dosnt show a big saving however I wasnt adjusting it from my agi

LEV :

If you are an employee (with compensation reported on W2) - deduction of employee business expenses will not affect you AGI - it will be reported on schedule A as miscellaneous itemized deduction.

LEV :

If you drive 1500 miles per month for business - total $18,000 per year - you may deduct 51 cents per mile - total - $9180.

LEV :

You need to add to this amount other items - such as charitable contributions, state income taxes, property and real estate taxes, mortgage interest, etc.

LEV :

Your actual deduction of employee business expenses is a subject of 2% AGI limit - thus - you will deduct $9180 - ($43,000*2%) = $8320.

LEV :

Assuming you are single, no dependents, standard deduction, $43,000 in wages - your estimated tax liability - $4230
If you go itemize - you will deduct employee business expenses $8320 plus some other deductible expenses - see above - assuming total $12,000. In this case your tax liability would be $3280.

LEV :

Let me know if you need any clarification.