A lot of employees that normally have to drive a lot for work will track their mileage and then claim the mileage as a deduction on their tax return, much like a self-employed taxpayer would.
That being said, this last tax season saw a lot of changes being implemented by the Tax Cuts and Jobs Act, and a big change impacted how we record mileage for employees.
Brian writes: “Hi Mike, I work for a construction company and have to drive a lot for work. I use my own car and pick up supplies and go to different sites. I always give my CPA my mileage at the end of the year. Not sure what he did with it but he said he won’t need it this year.
Does he know what he’s doing? I’ve been tracking it all year and I kind of want to use it if I can.”
Thanks for writing, Brian. Your CPA is right, he will not need your mileage this year. Unfortunately, one of the big changes from the Tax Cuts and Jobs Act was the suspension of writing off any deductions that were subject to the 2% of AGI floor. All that means is that any deductions that an employee would normally deduct are now suspended, including mileage.
Now, this does not mean that all hope is lost for employees that have to use their own car for work. But it may take some negotiating skills.
Your best bet is to talk to your employer about an accountable plan. These are very powerful tools for employers to use and are tax-advantaged. An accountable plan allows an employee to turn in an expense report to his or her employer with details of the expenses and then the employer can reimburse the employee, tax-free.
Accountable plans are non-taxable fringe benefits when used appropriately. For 2019, the IRS business mileage rate is 58 cents, meaning your employer can reimburse you 58 cents a mile, completely tax-free.
Now comes the negotiating part. Just because the benefit is tax-free does not mean your employer will want to implement it. If you have other co-workers that are affected by this, talk to them about it and approach your employer together. Perhaps bring an accountant with you to explain the benefits.
Hope this helps, Brian, and thank you for taking your time to write in.
To have your question featured, leave a comment below.
This article is not intended to legal, financial, or tax advice. For help regarding your specific situation, please consult a local advisor and thank you for reading.