One of the benefits of a corporation is the possibility of putting your car into the corporation. When a car is in a corporation, the corporation is responsible for paying for all the expenses associated with the car. In order to make things fair and legitimate with the IRS, there must be a personal reimbursement from the officer back to the corporation for the personal use of the corporate automobile.
One must be able to document the personal and business use of the car through a miles tracking log. The IRS comes from the perspective of wanting a complete and thorough log for 365 days per year. In the past we have been able to successfully defend a 2-week log as a fair representation of the year. The IRS does not like a 2-week log, but they have accepted it in the past.
Tracking your miles for 2 weeks is the absolute minimum and it needs to be done every year. We use this log to calculate the personal use reimbursement. If the log shows that your business use is 70% and personal use is 30% then your personal reimbursement will be equal to 30% of the total automobile expense.
A couple of things to keep in mind, in order for the corporate automobile to work, you must be able to document at least 50% business use. Less than 50% business use changes the rules and results in less favorable outcomes. If this is the case, then keep the car a personal car and your corporation can reimburse you for business miles.
The next thing to keep in mind is the definition of a business mile versus a commuting mile. When you drive from home to work and from work back home, it is considered commuting miles and it is not deductible. There are ways that you can maximize your business miles and your Fluence manager can help you understand how to maximize these miles.
If you already have a corporate automobile, make sure you are completing your log each year, and make sure you are maximizing your business miles. If you do not have your car in the corporation, feel free to contact your manager.