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OT Tax question

fg7321

fg7321

All Conference
Nov 29, 2009
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Relative started a new job last year in sales he had AGI of 40K and paid 4 k in federal taxes. He drove his car 15k miles for business purposes last year.

My accountant said it would not be worth it to file 1040 and take the mileage deduction as he will not hit the threshold for business expense deduction based solely on his miles driven.

Any insight would be appreciated...
 
fg7321 said:
Relative started a new job last year in sales he had AGI of 40K and paid 4 k in federal taxes. He drove his car 15k miles for business purposes last year.

My accountant said it would not be worth it to file 1040 and take the mileage deduction as he will not hit the threshold for business expense deduction based solely on his miles driven.

Any insight would be appreciated...
Click to expand...

You might need a new accountant.

Business expense deductions are subject to the standard "in excess of 2% of AGI" rule. 2% of 40k is 800.00. That means at 57.5 cents a mile he can file a 1040 and itemize $7824.

The only thing that would make it not worthwhile is if the $7824 is less than his standard deduction.
 
RU4Real said:
You might need a new accountant.

Business expense deductions are subject to the standard "in excess of 2% of AGI" rule. 2% of 40k is 800.00. That means at 57.5 cents a mile he can file a 1040 and itemize $7824.

The only thing that would make it not worthwhile is if the $7824 is less than his standard deduction.
Click to expand...

Me thinks his "tax preparer" has a kiosk at Walmart.
 
My first suggestion is to have your relative find a new employer. I wouldn't accept putting 15K miles on my personal car for a job paying 40 grand a year.
 
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We need some more information here. Is he single or married filing jointly? If married, id assume the accountant is correct and he's not going to get above the $12,600 standard deduction by itemizing. If single, since the std deduction is only 6300, he should itemize since he'd have the business deduction of 7,824, plus presumably some state taxes paid and donations to Rutgers

This is all dependent on him being paid via w2. If it's 1099, then he can take 100% of the mileage expenses on his schedule c.

Also, I'm assuming the 15k miles didn't include commuting, correct? That doesn't count.
 
Catwink03 said:
We need some more information here. Is he single or married filing jointly? If married, id assume the accountant is correct and he's not going to get above the $12,600 standard deduction by itemizing. If single, since the std deduction is only 6300, he should itemize since he'd have the business deduction of 7,824, plus presumably some state taxes paid and donations to Rutgers

This is all dependent on him being paid via w2. If it's 1099, then he can take 100% of the mileage expenses on his schedule c.

Also, I'm assuming the 15k miles didn't include commuting, correct? That doesn't count.
Click to expand...

Very accurate reply.
 
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