Registered: Oct 2000
Location: Aberdeen, SD
Posts: 2531

Proctology alive and well at IRS

Thought I'd efile with my friendly IRS agent, only to have them try to convince me that my refund was $600, when in fact I can get at least $3500.

At any rate, I have some questions about itemizing. While driving for my job, I hit a deer. My employer says my insurance deductible is able to be written off. I haven't heard that before, what do any among the assembled here know of it? The only thing that is being written off so far is my mileage (which means the difference between a $600 and $3500 return). Is there something I'm missing which could make a significant difference?

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-Joshua
Abortion: Darwinism at its finest.

Registered: May 2001
Location: NY metro area
Posts: 219

It depends upon why you use your car for business and what it is used for. It is very difficult to generalize anything about employee business expenses as they really do depend upon the facts and circumstances of each case.

But, if you're saying that if you are able to write off your insurance deductible your refund will increase by $2900, something is verey wrong. Assuming, for a moment, that you could write it off (and this is just an assumption for sake of arguement)[this is your normal disclaimer] your deductible would have to be almost $8000 and you would have to be in the highest tax bracket.

My suggestion would be to talk to a tax preparer in your area who can answer based on the specifics of yopur case.

I am the former tax manager for a CPA firm and still have my own small tax preparation service now.

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Jonathan

Registered: Sep 2000
Location: Rochester, NY
Posts: 284

I agree with jhappel, it's time to call in a pro. Have him/her go over your return and have them resubmit it. It's going to cost you money, but at least then you have someone to go to bat with you if the IRS decides to audit.

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It's gotta be weather balloons. It's always weather balloons. Big, fiery, exploding weather balloons.
-- ComaVN (from Slashdot)

Registered: Oct 2000
Location: Aberdeen, SD
Posts: 2531

No, I'm saying that the ~$7500 in mileage alotted by the IRS may make the difference between a $600 return and a $3500 return. I am an independant contractor with the local shopper and was doing work for them when I hit the deer. Regardless, I found out my wife gets to have someone file for her/us (city employee and all).

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-Joshua
Abortion: Darwinism at its finest.

Registered: May 2001
Location: NY metro area
Posts: 219

Just a quick note [my previous disclaimer still stands]

If you are a true independent contractor, you should be filing Schedule C with your federal return. On the schedule is a section for auto expenses, you take here either a flat allowance per business mile travelled or your actual expenses allocated between business use and personal use (usually based on the percentage of business mileage to total mileage). If you choose to use actual expenses you can include, among other items, insurance, gas, oil, depreciation and repairs. In this case, based upon what you have said, the insurance deductible is in reality repair expense, and therefor should be an expense on your Schedule C.

Let me know if you have any other questions, my fees are very low.

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Jonathan