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Standard mileage rate?

OntarioVanMan

OntarioVanMan

Retired Expediter
Owner/Operator
Frank...I am going to continue with the standard mileage deduction into the 6th year....My CPA is going to get a definite opinion from IRS...
because the circulars do NOT actually say it ends after the 5th yr.
it does refer ONLY that depreciation normally ends after 5yrs....

BUT I see where you are coming from...

IF standard mileage deduction is an option to rather then taking depreciation...then YES there might be a connection...

Those circulars really don't say directly and are really in the gray zone...
 
kwexpress

kwexpress

Veteran Expediter
what if the motor carrier is a partnership between my wife and son and the van is mine titled in my name only.
I lease my van to them exclusive.can I not take the standard milage rate then?
 
F

Fkatz

Veteran Expediter
Charter Member
It seems that everyone is confused on the basis of the standard mileage deduction.

If you use the "Standard Mileage Deduction" ( you must keep accurate daily mileage per load. and also list Shipper and Reciever for the Per Diem, this is only for Cargo Vans Under 10,000 GVW you cannot deduct the following:
Depreciation
Fuel
Insurance
Loan Payments
Interest on truck
Repairs & Maintenance
Sales Tax on Truck if purchase within the tax year
plus other minor items, ("cannot list all")

Maximun use of the Standard Mileage Rate is 5 years from the date the vehicle is put into service. Meaning, if your vehicleis was 1st put into service in April 2011 You will have until March 2017 to be able to claim the Mileage rate. After that if you plan on keeping your vehicle you must take actual expenses.

Actual expenses would include

#1 THERE WILL BE No depreciation AVAILABLE AFTER THE STANDARD MILEAGE IS USED
Fuel
Insurance
Interest on vehicle note if still paying it off
Repairs and Maintenance
etc.

If there are any additonal questions please do not hesitate to ask.

REMEMBER YOU HAVE EXACTLY ONE MONTH FROM TODAY TO FILE YOUR 2010 INCOME TAX RETURNS IF YOU HAVE FILED FOR AN EXTENSION. OCTOBER 15TH, 2011

THE EXTENSION ONLY SAVES YOU THE LATE FILING FEE OF 22.5% OF THE TAXES OWED.

BUT INTEREST AND PENALTIES CONTINUE TO ACCRUE FROM APRIL 15TH THE FILING DEADLINE DUE DATE.

iF YOU HAVE NOT FILED FOR AN EXTENSION AND YOU OWE TAXES THE 22.5% WILL ADDED CHARGED TO YOU .

Franklin Katz, ATP, PA, PB,
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC 28086-3151
(704) 739-4039 Fax: (704) 739-3934
e-mail: [email protected]
Web Site: File Your Return Online

Providing Professional Accounting Services and Income Tax Preparation

Circular 230 Disclaimer – Any tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax related penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or tax
related matters addressed herein.
 
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paullud

paullud

Veteran Expediter
If we use the standard mileage deduction do we still get to write off insurance not associated with the van like OCC?

Posted with my Droid EO Forum App
 
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OntarioVanMan

OntarioVanMan

Retired Expediter
Owner/Operator
Frank...Sorry but I still dispute the 5yr limit on the standard deduction after getting this from a yet ANOTHER member that has dealt with this issue....
------------------------------------------------------------------------
I contacted Bernard Harvey, the author of the IRS publication that deals with depreciation. I explained what we do as expediters and the information we were receiving from “Tax Experts” about the 5 year rule on the standard mileage rate. I asked him why the IRS would tell me I would lose a deduction and completely change my accounting system because of the age of my vehicle. I explained to him the benefit of using the standard mileage rate and it would almost force me into purchasing another vehicle just to make a living out here. He seamed very interested in our business and told me that he did not work with the mileage rate division but would try to find out and get back to me. (I thought he was just blowing me off at that time) Low and behold, about a month later he called me and advised me that I could continue to use the standard mile rate as the age limit was dropped “years” ago.

Since then, I went through a complete Revenue, Mileage and Expense (schedule C) audit with the IRS and the 6th year of using the standard mileage deduction never came up. As a matter of fact, I had a profit on a second schedule C (from another small job) and the IRS combined both schedule C’s showing an overall loss and gave me a refund after the audit.
 
F

Fkatz

Veteran Expediter
Charter Member
Ontario Man,

Even though you spoke with this Mr. Harvey, the rule of thumb is as follows.


if you Drive a Tractor, or straight truck over 26,000 lbs GVW you must use the depreciation method. and that is 3 years with a life of 4 depending on when it is put into service.


If you drive a Straight Truck and it is between 10,000 and 26, 000 lbs GVW you must take the depreciation Method and it is 5 years with a life of 6 years.


If you have a Cargo Van under 10,000 lbs GVW you use the depreciation method the life is 5 years with a 6 year life.

So it you depreciate the Cargo van for 5 years, you have no more deduction for it. but you can take the balance of the payments, and Interest separately on the Sch C. if you have a 6 year payout, once the 6 years are up you have no deduction for the van.


According to the IRS (Drepreciation Department) for small businesses. who I spoke with the mileage rate for a vehicle under 10,000 lbs gvw is 5 years using this deduction, This is due as being the same as if you depreicated it as above in the last paragraph. After The life of the vehicle there is no deduction for it at all. unless you still have a balance due on the vehicle note.


Truthfully, If you trade or sell your vehicle for a profit you must recapture all the mielage that was taken the years it was actually in service. and that is a lot more then what you paid for it.


For tax years starting for 2011 you are going to be required to use a fsome sort of proof sheet for both the Per Diem and the standard mileage to prove your deduction in Cargo vans.

In the other vehicles, the log book will surfice.



THIS IS NOW A RED FLAG FOR AUDITS.!!!!!!!!!!!!!!!
IT DOES NOT SAY THAT EVERYONE WILL BE AUDITED, THEY JUST DO NOT HAVE ENOUGH AGENTS TO AUDIT EVERYONE


Franklin Katz, ATP, PA, PB,
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC 28086-3151
(704) 739-4039 Fax: (704) 739-3934
e-mail: [email protected]
Web Site: File Your Return Online

Providing Professional Accounting Services and Income Tax Preparation

Circular 230 Disclaimer – Any tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding related
penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or tax
related matters addressed herein.
 
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bobwg

bobwg

Expert Expediter
Hi I bought a used 2002 Sprinter earlier this year, just wondering if I am correct in using the standard mileage rate? or does that only apply to new Sprinter/Cargo Vans???
 
F

Fkatz

Veteran Expediter
Charter Member
Hi Bob, On that Ontario Man is correct, and you owe him a cup of coffee

Since you are just starting out, the mileage rate will apply

Frank
 
P

poondog

Active Expediter
My situation is a little different, I just signed on as an O/O to do a ~300 mile per day courier run, with the shipper and reciver being the same. I deliver and pick up medical specimins and medical waste. Can I use the per diem and milage rate, or is the perdiem disallowed since I'm home every night.
 
F

Fkatz

Veteran Expediter
Charter Member
Poondog,

Since you are considered a local driver the PER DIEM does not apply and is not deductible, but the mileage rate is.

Frank
 
L

luis27501

Expert Expediter
A lot of good information and debating on standard milage VS actual expenses.

Heres what I was told by a representative from the IRS about the standard mile deduction. I was told you can only take the standard mile deduction for up to 5yrs since the deduction is including all your expenses fuel, repairs, depreciation, etc. The only other thing you can deduct is your hotels, per diem, business cell phone, interest paid and tolls. I was told that you can not take standard mile the 6yr the vehicle is in service for the reason that depreciation is include in the standard mile deduction. And the max years for depreciation is 5yrs. I know there is a lot of debate on if you can still use standard deduction after the 5yr. Accountants disagree on how to apply this deduction to peoples taxes. So who can you trust NO ONE I guess. Get inform make some calls and explain in details.
 
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