You Own the Automobile, Take Mileage Deduction

Jason Watson, CPA

1 year ago

By Jason Watson, CPA
Posted Saturday, November 4, 2023

This is dead for S Corp shareholders. Thanks to the Tax Cuts and Jobs Act of 2017 all miscellaneous deductions that were once subjected to 2% adjusted gross income limits and then deducted on Schedule A are gone. Obtaining a tax deduction through a mileage deduction on your individual tax return was always a bad idea anyway with the Form 2106 and Schedule A limitations, and now it’s just a memory.

If your business is not taxed as an S Corp, you are still able to deduct mileage on Schedule C of your Form 1040 tax return, or as Unreimbursed Partner Expenses (UPE) on Page 2 of Schedule E. We discuss this elsewhere, but for partners in a multi-member limited liability company who are used to this deduction, electing S corporation status will wreck your world a bit. Rather it being a deduction, it becomes a reimbursement from the business. In turn, that adds some office politics on who is spending what and for what.

Jason Watson, CPA, is a Senior Partner of WCG CPAs & Advisors, a boutique yet progressive tax, accounting
and business consultation firm located in Colorado serving small business owners and taxpayers worldwide.

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