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OT Tax question

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fg7321

All-American
Nov 29, 2009
4,303
5,181
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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...
 
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RU4Real

Heisman
Jul 25, 2001
50,955
30,734
0
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.
 
KJB32812

KJB32812

Heisman
Dec 25, 2008
41,046
84,708
113
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.
 
C

Crazed_RU

All-Conference
Nov 7, 2006
2,655
3,295
98
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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Upstream

Upstream

Heisman
Jul 31, 2001
35,286
10,254
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He put 15K miles on his car for business purposes and didn't get an expense reimbursement?
 
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Catwink03

Freshman
Aug 31, 2006
176
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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.
 
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taudelt73

Redshirt
Jan 6, 2007
30
9
8
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.
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Very accurate reply.
 
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