DC from Cape Cod

I work from home as well....and the IRS code stipulates that the first trip of the day is NOT deductible. This is both a common misperception and an audit flag.

I have my taxes done by 2 different accounting firms (gives me a second perspective for short money) and they both confirmed this fact this week.

PogueMoHone

Don,

You need a better accountant, and then only pay once!

DC from Cape Cod

Doug, not Don (wife makes the same mistake too).....and with what I get stuck paying, the second opinion is worth it (and deductible).

Kevin M.

Colm are you still fighting with the insurance company?

PogueMoHone

Yes!

ljugete

I deducted 100% of the cost of my well optioned CS last year & yes, I use it all the time for business. I'm also a physician.

My CPA was ok with me taking a 100% deduction given I have three other cars for leisure/family events.

I saved over $23K in taxes! (Cost = ~ $70K - $23K = $44K!)

DC from Cape Cod

Having other cars is only part of the equation....I have 4 other vehicles myself.

Commuting is not deductible mileage. (I.e. Home to hospital or home to office is not deductible mileage).

You CAN deduct business mileage if your PRINCIPAL place of business is your home and you are driving to work related locations.

You have no regular office, and you do not have an office in your home than the location of your first business contact is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Although you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another.

Source: http://www.irs.gov/publications/p17/ch28.html

P.S. The Tax Code sucks.

GM Austin

Thanks DC. You are exactly right of course. The tax code is quite restrictive in this area in spite of the public image of this deduction amounting to a free luxury SUV for business owners. Regardless of your opinion of the tax code, it simply reflects what our elected officials are asking the IRS to do. We may begin to see stronger enforcement of these types of deductions as the IRS is pressured to collect additional revenue to compensate for tax cuts. This begin happening during the Reagan years when the IRS decided certain types of expenses would be capitalized to help accelerate revenue collection and help compensate for tax cuts. Until our government reduces spending enough to balance the tax cuts, we will continue to see very aggressive tax code interpretation and enforcement.

Sorry for getting off topic. I just wrote the IRS a big check.

johnhct

If we really want to fix this system we will do away with the IRS and replace it with a National Retail Sales Tax. There is a resolution in the House now, H.R. 25 to do just that. It will take an enormous grass roots movement to get it done.

For more info, go to http://www.fairtax.org.

PogueMoHone

Don't kid yourself!

A national retail sales tax will be in addition to, not instead of..welcome to the future.

johnhct

That's impossible. H.R. 25 will abolish the IRS. There will never be another income tax because there will be no one to administer it. And no politician will ever suggest reinstating the beloved IRS.

ljugete

DC,

I'm aware of these confusing IRS rules. I'm an Independent Contractor and work as a Physician at several Rural Hospital E.R.'s in IL & WI.

I'll typically put in at least 60+ hrs. per trip a week including sleep interval/lodging. My E.R. Locums Group pays my mileage and meals. I pay for lodging overnight when required. (I usually will sleep in my E.R call room at less busy locations).

My CPA says I qualify for these travel deductions. I've been doing this for years and thank God, no problems with the IRS - Knock on wood!.

I too pay alot of $$$ to Uncle Sam on a quarterly basis.

Thanks for the info.

DC from Cape Cod

If you get your mileage re-imbursed (part of mileage allowance is depreciation) AND you take 100% business use/depreciation than you are double-depreciating the vehicle....aren't you?

I would, respectively, suggest that you get a second opinion from a different CPA.

ljugete

DC, I will do that.

TIA!

DC from Cape Cod

Best of luck with it. Our situations seem almost identical (1099, drive a lot, have other cars, pay a TON in taxes, etc.) and I researched every angle I could think of to save more money. I kept running up against a wall and if I went around/over it I found myself either in an audit flag situation or taking more depreciation than I was allowed. Both CPA's concurred.

If you can find a way to depreciate more than 1 vehicle (without having a second business/1099 source) please let me know.