I have been doing contract work for a company using my own truck and deducting mileage on my tax return. The company I work for has now agreed to hire me as an employee on their payroll. They are supposed to furnish my truck and gas Now they are talking about renting my truck from me while I work for them. Is this a good idea? Could I still deduct my mileage or would I have to report the rent as income?

YOu need to decide WHO foots the costs for repairs and maintenance while its being rented to them as well. (and fuel)

If they are renting the truck... and paying for fuel and maintenance you won't be abel to write off mileage.

If you decide to do that... factor like a lease the maximum mileage per year at that rate.. And specify a charge for mileage in excess.

I would not do it for even what the IRS allows for deductions... its hard to even break even at that rate... you want to come out ahead on this financially... or why do it at all.

THey think they can sucker you in at a lower rate than they would pay to lease one themselves... the differnce would be at your expense.

I agree - don't do it! Fraught with problems aside from financial ones.

Yes, you'll have to claim rental income on your tax return.

Depends on how much they'll pay you. I'm guessing you're debating if you should claim mileage or have them "rent" your car. You could offset truck maintenance and gas against your rental income. Talk to your tax guy when you have the actual numbers and he'll be able to determine which is better for you after taxes.

You may not have much choice, if you want the job. Try to negotiate a higher rate of pay in lieu of their essentially providing your transportation and fuel. But maybe that won't fit their tax structure.
Or rather than their paying you rent, try to get a vehicle allowance. And whichever you work it out make sure your auto insurance company knows about the arrangement.
It is not uncommon for construction contractors to make arrangements with their employees to use the employee's vehicle for more than just travel (don't know if this is the case with you or not).
If you want the job, don't let this proposed arrangement kill the opportunity. Consult an accountant or tax specialist if necessary and get the best deal you can get. And don't forget that the commuting portion of your travel, if paid for (or partially paid for) by the employer, is taxable.

You should have all your tax records together for last year. Total up EVERYTHING you put into your truck: fuel, depreciation, maintenance, taxes and licenses, even car washes. Estimate what you don't have figures for, such as down time during brake jobs. Add 10% for the things you forgot about. Then you'll have a number for the company to beat on their rental offer. You may consider a 15% fudge factor and drop 5 for the convenience of not having to get used to a new vehicle.

Like Smoothy said, you need to show a profit on this or don't do it.

while all the advice you have received is good advice noone has suggested you have to factor in interest on your capital as well, you are lending them money. The important thing here is the deal covers all your costs so you will be able to deduct these costs against the income. If they are responsible for fuel and maintenance you still bear the depreciation but be careful because if the contrator goes belly up as they often do you are going to be out of pocket