As the sole owner/employee of an LLC taxed as an s-corp, you may be curious as to what qualifies as a 100% deductible travel expense.
NO - NOT A DEDUCTIBLE TRAVEL EXPENSE (SEE EXCEPTIONS BELOW) 🚩
Car Loan or Lease Payments
Car Repairs and Maintenance
EXCEPTIONS: If the vehicle is registered in the name of the business and used exclusively for business, then you may deduct the above expenses. These expenses may also be deductible when using a personal vehicle if the actual expense method is being used with respect to vehicle expenses. The actual expense method requires tracking all car related expenses (through personal accounts) and then using an allocation percentage based on business mileage / total mileage. Note that the "actual expense" method is an alternative to the "standard mileage rate" - they cannot both be used. We recommend that our members track their miles and then use the "standard mileage rate" via the accountable plan instead of using the "actual expense" method.
YES - A DEDUCTIBLE TRAVEL EXPENSE IF TRAVELING OVERNIGHT FOR BUSINESS✅
These are deductible travel expenses if you are on a dedicated business trip outside of your tax home (The Internal Revenue Service (IRS) considers an employee to be traveling away from home if their business obligations require them to be away from their tax home for a period longer than an ordinary work day.)
WAIT, THAT DOESN'T SEEM SUPER GREAT
Don’t be too discouraged by the stringent rules set by the IRS for the deductibility of travel expenses. The good news is that you’ll be able to still capture the expenses associated with using your car for business purposes via your accountable plan expenses using the IRS standard mileage rate.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.