OT Tax question

[fg7321]

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...

 

[Tango Two]

What did his accountant say?

 

[RU4Real]

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...

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]

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.

Me thinks his "tax preparer" has a kiosk at Walmart.

 

[Crazed_RU]

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.

 

[Upstream]

He put 15K miles on his car for business purposes and didn't get an expense reimbursement?

 

[Catwink03]

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.

 

[taudelt73]

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.

Very accurate reply.

 

[RU Cheese]

"Relative" started a new job...
"My accountant"...

Hmmmm