sole prop. - mileage deductions with no "main job" site

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cals400ex
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sole prop. - mileage deductions with no "main job" site

Post by cals400ex » Thu Feb 16, 2017 9:45 am

I'm an independent contractor (sole proprietor) working as a dentist in nursing homes/assisted living centers. I go to different nursing homes/assisted living centers each day, so I don't have a "regular" or "main" work site. I have no reason to believe any location will be a temporary job. At the end of the year, I may end up going to one nursing home/assisted living center more than any other one, but I do not know this early on as my schedule is made only a couple weeks in advance. I do have an "office" at my house that I use solely for keeping track of miles/business expenses (but that doesn't take much time since I do the calculations daily), and I'm not doing any form of dentistry out of that room so I wouldn't think that is considered my "principal place of business." I don't have a business-only vehicle. My commuting miles add up quickly (average 100 miles per day) so I was curious if I could deduct these?

flyingbison
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Joined: Wed Mar 12, 2014 8:52 am

Re: sole prop. - mileage deductions with no "main job" site

Post by flyingbison » Thu Feb 16, 2017 9:59 am

"Daily transportation expenses you incur while
traveling from home to one or more regular places
of business are generally nondeductible
commuting expenses."

See page 14 and following: https://www.irs.gov/pub/irs-pdf/p463.pdf


This example may also be relevant to you:
"Example 3. You have no regular office, and
you don’t have an office in your home. In this
case, the location of your first business contact
inside the metropolitan area is considered your
office. Transportation expenses between your
home and this first contact are nondeductible
commuting expenses. Transportation expenses
between your last business contact and your
home are also nondeductible commuting expenses.
While you can’t deduct the costs of
these trips, you can deduct the costs of going
from one client or customer to another."

Topic Author
cals400ex
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Re: sole prop. - mileage deductions with no "main job" site

Post by cals400ex » Thu Feb 16, 2017 12:02 pm

It looks like I won't be able to deduct those commuting miles. When calculating miles that I can deduct when working at multiple job sites on the same day, which method do I use:

Example:
Home to job site 1 (20 miles) - job site 1 to job site 2 (15 miles) - job site 2 to home (8 miles).

Would my deductible mileage for the day be 15 miles (job 1 to job 2), or would I take my normal daily commute of only working at job site 1, 20 miles to work and 20 miles home from work (40 miles) and subtract it from the total miles traveled for the day (20+15+8 =43), 43-40=3 miles?

flyingbison
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Re: sole prop. - mileage deductions with no "main job" site

Post by flyingbison » Thu Feb 16, 2017 12:12 pm

cals400ex wrote:It looks like I won't be able to deduct those commuting miles. When calculating miles that I can deduct when working at multiple job sites on the same day, which method do I use:

Example:
Home to job site 1 (20 miles) - job site 1 to job site 2 (15 miles) - job site 2 to home (8 miles).

Would my deductible mileage for the day be 15 miles (job 1 to job 2), or would I take my normal daily commute of only working at job site 1, 20 miles to work and 20 miles home from work (40 miles) and subtract it from the total miles traveled for the day (20+15+8 =43), 43-40=3 miles?
I believe you can only deduct the 15 miles between those 2 job sites.

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Meg77
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Re: sole prop. - mileage deductions with no "main job" site

Post by Meg77 » Thu Feb 16, 2017 12:29 pm

You should claim a home office deduction. I recently attended a tax seminar on this topic for continuing education in which a CPA explained how claiming a home office benefits you by enabling increased mileage/car deductions - which he belabored as being the most overlooked and valuable deduction for most self-employed folks (and also the most poorly documented and therefore risky if you're audited). He went into detail about how home office deductions are actually NOT the audit flag that many people think they are, how rules have changed that enable you to take it even if you don't have a specific room dedicated to an office, etc. He also detailed exactly how to track mileage/auto expenses and the problem with some of the popular apps or GPS methods that will mess you up in an audit.

I'm no expert, but I'd see a CPA and look into it, especially since you have no other primary office (the tax strategist in the seminar was promoting it even assuming you DO have a local office).
"An investment in knowledge pays the best interest." - Benjamin Franklin

gclancer
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Re: sole prop. - mileage deductions with no "main job" site

Post by gclancer » Thu Feb 16, 2017 12:54 pm

Meg77 wrote:You should claim a home office deduction.
+1 - I imagine it's too late for 2016, but read up on what's required to take the home office deduction (the main thing that trips people up is exclusive use) and go out of your way to comply. That may entail moving the spot where you sit down to calculate your daily mileage to the least desirable place wherever you live but the tax savings will be worth it (for example, set up shop in the dingy portion of your unfinished basement that everyone avoids - you get the idea). You can save yourself a bit of trouble by using the safe harbor which relieves you of a lot of the record keeping burden formerly associated with the home office deduction.

Miakis
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Re: sole prop. - mileage deductions with no "main job" site

Post by Miakis » Thu Feb 16, 2017 1:27 pm

If your office in your home is your primary location for performing the administration tasks relating to your business, then that's a qualifier for the home office deduction. You don't have to actually see clients in the home office.

Topic Author
cals400ex
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Re: sole prop. - mileage deductions with no "main job" site

Post by cals400ex » Thu Feb 16, 2017 3:18 pm

I don't really have any administrative tasks. The company that hired me requires me to be a independent contractor/sole proprietor. They send me my work schedule and I have to show up to work, that's it. The only thing I use the "office" for would be to keep my log of daily miles traveled. It sounds like this can still be an option?

NewtonsApple
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Re: sole prop. - mileage deductions with no "main job" site

Post by NewtonsApple » Thu Feb 16, 2017 4:13 pm

Sounds like they are treating you as an employee and should be giving you benefits along with normal employee protections.

Is all your work for one "employer"?

Topic Author
cals400ex
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Re: sole prop. - mileage deductions with no "main job" site

Post by cals400ex » Thu Feb 16, 2017 5:53 pm

Honestly, I almost feel like an employee. All of my work is for one company with this job (this job is part-time for me, usually only 1-2 days per week). With that being said, our contract is very clear that I am an independent contractor, and there is no form of employer/employee relationship. I get no benefits and no taxes are taken out of my paycheck. Since it's only for one day per week, it was easier for me to be a sole proprietor instead of setting up a s-corp.

*One thing that I forgot to mention is that this company pays me $0.15 per mile, for every mile driven above 30 miles per day. I will be taking the standard mileage deduction bc it's a lot easier to do. However, I'm still trying to figure out what miles I can legally deduct...

saladdin
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Re: sole prop. - mileage deductions with no "main job" site

Post by saladdin » Thu Feb 16, 2017 6:30 pm

cals400ex wrote:Honestly, I almost feel like an employee. All of my work is for one company with this job (this job is part-time for me, usually only 1-2 days per week). With that being said, our contract is very clear that I am an independent contractor, and there is no form of employer/employee relationship. I get no benefits and no taxes are taken out of my paycheck. Since it's only for one day per week, it was easier for me to be a sole proprietor instead of setting up a s-corp.

*One thing that I forgot to mention is that this company pays me $0.15 per mile, for every mile driven above 30 miles per day. I will be taking the standard mileage deduction bc it's a lot easier to do. However, I'm still trying to figure out what miles I can legally deduct...
It's not the employer's choice. The IRS has guidelines on what constitutes an employee/independent contractor.
An employer can have you sign a contract saying you're a cyborg intent on conquering the world but it doesn't make it so.

Gropes & Ray
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Re: sole prop. - mileage deductions with no "main job" site

Post by Gropes & Ray » Thu Feb 16, 2017 6:54 pm

Do you order equipment, maintain business/malpractice insurance, pay taxes, communicate with your client/"employer"? Where do you do these things? In your home office I presume.

TMCD75
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Re: sole prop. - mileage deductions with no "main job" site

Post by TMCD75 » Thu Feb 16, 2017 7:06 pm

I was a sole proprietor for years and I deducted absolutely any mileage that related to my business. If I had to drive 30 miles to pick up materials, that was deducted. Driving to bid jobs was deducted, etc.

In your scenario the tricky part is that they're paying you 15 cents per mile after the 30th mile on a given day. I would prefer to turn that down and have the full write off. You'll need to check on this, I'm sure there's a CPA on here to address this.

Anytime you leave your house for a business related issue, the mileage is a write off.

Topic Author
cals400ex
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Re: sole prop. - mileage deductions with no "main job" site

Post by cals400ex » Thu Feb 16, 2017 7:38 pm

TMCD75 wrote:I was a sole proprietor for years and I deducted absolutely any mileage that related to my business. If I had to drive 30 miles to pick up materials, that was deducted. Driving to bid jobs was deducted, etc.

In your scenario the tricky part is that they're paying you 15 cents per mile after the 30th mile on a given day. I would prefer to turn that down and have the full write off. You'll need to check on this, I'm sure there's a CPA on here to address this.

Anytime you leave your house for a business related issue, the mileage is a write off.
From what I was told, the standard deduction is $0.54 per mile for 2016. If i'm paid 0.15 per mile above and beyond the 30th mile driven, I just have to subtract this from the standard deduction for each mile beyond the 30th (.54 - .15 = .39) and that remaining amount is still deductible. So, I'd be deducting .54 cents for the first 30 miles and only deducting .39 cents for miles 31+.

Topic Author
cals400ex
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Re: sole prop. - mileage deductions with no "main job" site

Post by cals400ex » Thu Feb 16, 2017 7:48 pm

Gropes & Ray wrote:Do you order equipment, maintain business/malpractice insurance, pay taxes, communicate with your client/"employer"? Where do you do these things? In your home office I presume.

I do not order equipment. The company employs dental assistants and hygienists to do this. They are employees, unlike the dentist's. I pay my malpractice insurance as a lump sum for the whole year. My CPA does my yearly taxes for me. However, I do use this office to keep track of my bills (malpractice insurance, disability insurance, dental licenses, etc.). To complicate things, I am an employee at another job. So, I'll need to find the correct way to differentiate what I can deduct on my taxes for my independent contractor job vs. my employee job. For example, I can deduct my illinois dental license fees. I'm not sure if I will deduct 50% of the cost of the license from each job? Or will it be based on a percentage of time I spend working at each job? Or will it be based on a percentage of my income from each job?

NewtonsApple
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Re: sole prop. - mileage deductions with no "main job" site

Post by NewtonsApple » Thu Feb 16, 2017 7:59 pm

cals400ex wrote:One thing that I forgot to mention is that this company pays me $0.15 per mile, for every mile driven above 30 miles per day. I will be taking the standard mileage deduction bc it's a lot easier to do. However, I'm still trying to figure out what miles I can legally deduct...
$0.15 a mile over 30 miles!! That seems really low to me. You almost might as well not keep track of mileage for them. If you drove 1000 miles to a site that would only be $145.50.

Please tell us they are paying you a lot, but I have a suspicion they are cheap. Your hourly rate should be 20-50% higher than if you were an employee. It should be on the high end I think due to the extensive travel.

Read up on employee vs contractor and learn your rights.

Now back to your question.

The IRS has great instructions for all these sorts of things with a little looking, one person mentioned 463 earlier.

Your situation is pretty simple and from the little we know you likely qualify to deduct all the mileage unless you do a lot of administration outside your home.

From Pub 587 https://www.irs.gov/pub/irs-pdf/p587.pdf
Your home office will qualify as your principal place of
business if you meet the following requirements.
You use it exclusively and regularly for administrative
or management activities of your trade or business.
You have no other fixed location where you conduct
substantial administrative or management activities of
your trade or business.

From Pub 463 https://www.irs.gov/pub/irs-pdf/p463.pdf
Office in the home. If you have an office in
your home that qualifies as a principal place of
business, you can deduct your daily transportation
costs between your home and another
work location in the same trade or business.

flyingbison
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Re: sole prop. - mileage deductions with no "main job" site

Post by flyingbison » Thu Feb 16, 2017 8:48 pm

cals400ex wrote:I don't really have any administrative tasks. The company that hired me requires me to be a independent contractor/sole proprietor. They send me my work schedule and I have to show up to work, that's it. The only thing I use the "office" for would be to keep my log of daily miles traveled. It sounds like this can still be an option?
Others here seem to disagree, but what you are describing does not sound to me like your home is your principle place of business.

NewtonsApple
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Re: sole prop. - mileage deductions with no "main job" site

Post by NewtonsApple » Thu Feb 16, 2017 9:04 pm

cals400ex wrote:
TMCD75 wrote:I was a sole proprietor for years and I deducted absolutely any mileage that related to my business. If I had to drive 30 miles to pick up materials, that was deducted. Driving to bid jobs was deducted, etc.

In your scenario the tricky part is that they're paying you 15 cents per mile after the 30th mile on a given day. I would prefer to turn that down and have the full write off. You'll need to check on this, I'm sure there's a CPA on here to address this.

Anytime you leave your house for a business related issue, the mileage is a write off.
From what I was told, the standard deduction is $0.54 per mile for 2016. If i'm paid 0.15 per mile above and beyond the 30th mile driven, I just have to subtract this from the standard deduction for each mile beyond the 30th (.54 - .15 = .39) and that remaining amount is still deductible. So, I'd be deducting .54 cents for the first 30 miles and only deducting .39 cents for miles 31+.
You are a contractor, so that $0.15 per mile above 30 miles is taxable (revenue) and you can deduct the $0.54 per mile for all your miles (your expense).

Absolutely no reason not to take the $0.15 per mile if you are already tracking miles, your deduction is the same either way and you would be getting paid less.

cholan
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Re: sole prop. - mileage deductions with no "main job" site

Post by cholan » Thu Feb 16, 2017 9:17 pm

If you have a post office close to you, can you set up a po box where you collect all your business mail, and go from there to your workplace? Will this work?
...leaving not a rack behind.

NewtonsApple
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Re: sole prop. - mileage deductions with no "main job" site

Post by NewtonsApple » Thu Feb 16, 2017 9:19 pm

flyingbison wrote:
cals400ex wrote:I don't really have any administrative tasks. The company that hired me requires me to be a independent contractor/sole proprietor. They send me my work schedule and I have to show up to work, that's it. The only thing I use the "office" for would be to keep my log of daily miles traveled. It sounds like this can still be an option?
Others here seem to disagree, but what you are describing does not sound to me like your home is your principle place of business.
Read Pub 587. His business does have administrative tasks, even if he doesn't have a lot of administrative tasks. As long as there is very little administration tasks performed outside his home and the home office can meet the elusive use requirement, it can be declared a principal place of business.

flyingbison
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Re: sole prop. - mileage deductions with no "main job" site

Post by flyingbison » Thu Feb 16, 2017 10:46 pm

NewtonsApple wrote:
flyingbison wrote:
cals400ex wrote:I don't really have any administrative tasks. The company that hired me requires me to be a independent contractor/sole proprietor. They send me my work schedule and I have to show up to work, that's it. The only thing I use the "office" for would be to keep my log of daily miles traveled. It sounds like this can still be an option?
Others here seem to disagree, but what you are describing does not sound to me like your home is your principle place of business.
Read Pub 587. His business does have administrative tasks, even if he doesn't have a lot of administrative tasks. As long as there is very little administration tasks performed outside his home and the home office can meet the elusive use requirement, it can be declared a principal place of business.
I've read it and I disagree.

"To determine whether your home is your principal place of business, you must consider:
* The relative importance of the activities performed at each place where you conduct business, and
* The amount of time spent at each place where you conduct business"

But, neither one of us gets to decide.

ERISA Stone
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Re: sole prop. - mileage deductions with no "main job" site

Post by ERISA Stone » Fri Feb 17, 2017 1:25 am

Meg77 wrote:You should claim a home office deduction. I recently attended a tax seminar on this topic for continuing education in which a CPA explained how claiming a home office benefits you by enabling increased mileage/car deductions - which he belabored as being the most overlooked and valuable deduction for most self-employed folks (and also the most poorly documented and therefore risky if you're audited). He went into detail about how home office deductions are actually NOT the audit flag that many people think they are, how rules have changed that enable you to take it even if you don't have a specific room dedicated to an office, etc. He also detailed exactly how to track mileage/auto expenses and the problem with some of the popular apps or GPS methods that will mess you up in an audit.

I'm no expert, but I'd see a CPA and look into it, especially since you have no other primary office (the tax strategist in the seminar was promoting it even assuming you DO have a local office).
I have had multiple CPAs indicate deducting a home office increases an audit score.

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