If you are not being taxed as an S Corporation but you are earning more than $50,000 net business income after expenses(profit), you might want to consider making an S Corp Election.  We might be able to retroactively make this election to January 1 of last year and save 8% to 10% in taxes.  It might cost you $1500-$2500 to save $8,000, but simple math says it is a good idea.

Who Should Use This Section

There are three situations for vehicle expenses and mileage‐

1. Your business owns the vehicle. If this is your situation, do not use this form since actual expenses associated with your business vehicle will be detailed (and deducted) in your business expenses.

2. You own the vehicle, and you want to deduct the mileage allowance (or deduct the mileage reimbursement as a business expense).

3. You own the vehicle, and you want to deduct the actual expenses associated with the business vehicle such as gas, insurance, lease payments, maintenance, etc. (or deduct the vehicle expense reimbursement as a business expense)

 

In most cases, using the mileage rate as a deduction or reimbursement is preferred over actual expenses. Traveling salespeople and other W‐2 employees who historically deducted mileage on Form 2106 as a unreimbursed expense are no longer allowed to deduct mileage (this is part of the Tax Cuts and Jobs Act of
2017). A company may still reimburse you up to the mileage rate without it being considered income to you, but any difference cannot be deducted due to the recent tax reform (sorry).

* Business miles will be the difference of ending odometer less starting odometer, personal miles and commuting miles.

** For the 2022 tax year, the mileage rate is split between 58.5 (Jan – Jun) and 62.5 cents (Jul – Dec).

 

Mileage Log

Mileage is one of the most incorrectly deducted expenses, and therefore it is one of the most scrutinized by the IRS. Easy money for them. First, you need to prove you own the vehicle(s). Next, you need to keep track of your beginning and ending odometer readings, and have that data corroborated by service receipts. Therefore, it is a good idea to make copies of service invoices such as Jiffy Lube since these companies record odometer readings. Lastly, you need to keep track of the date, the business miles driven and the business connection. We do not normally need to see your mileage log. In some cases, we might. We always suggest using a
smartphone app to track your mileage via GPS which also emails you a mileage log compilation. Very nice. Remember, a written log is required to be maintained by you, and can be requested anytime by the IRS during an examination. Memories grow short‐ keep up with this requirement

Please send your mortgage interest statements (Form 1098) and any other year‐end statements. We will use that information to compute your deduction for mortgage interest, private mortgage insurance (PMI) and real estate taxes.
Please complete the rest of the expenses associated with your entire home, and we will allocate the expenses to your home office accordingly.

• Provide the business income/financial statements for the year (per
  books), balance sheet, depreciation schedule per books, and cash
  reconciliation of all business bank accounts with ending cash balances.
• If the business made payments of $600 or more to independent
  contractors, provide copies of Form 1099-NEC issued.