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C Corp Owner/Employee and Mileage Compensation
I own a C corp with two employees including me. My truck is used by the other employee for business purposes (pool cleaning) to the tune of 700-800 miles/ week. Can I pay myself the $.50/ mile weekly for the mileage and deduct this from the business and not pay any income tax on it? Also, my function in the company is billing, payroll book keeping and marketing to other contractors (we sub contract with businesses do not work directly with clients) what is a reasonable salary for myself? I am afraid my salary won't be much after paying the mileage and the other employee is this OK?
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The C Corporation is considered a totally separate tax entity, so, yes, you can reimburse yourself to the amount of 5o ents per mile. However, you would have to show that money was rental income on your personal tax return.
You should also pay yourself as a employee of the business. The level of pay is dictated by what someone doing similar work for like companies get paid. Bookkeeping personnel typically get paid anywhere from $20K - 60K per year, depending on WHERE in the country you are located. |
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Comment on AtlantaTaxExpert's post
If the car is in my name but my husband drives it for work could the company reimburse him for the mileage ? Does it have to be me that is reimbursed? The reason that I was doing this was because we were told mileage reimbursment is not income. Thanks!
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Again, the reimbursement IS legal and proper, whether it is distributed to him or you.
Now, as a modification of my previous guidance, if your husband pays for gas and other maintenance on the truck out of pocket, then the reimbursement CAN be considered tax-free, provided a mileage log is maintained and an periodic (say, monthly) expense report is submitted to account for the reimbursement. The reason the reimbursement would be tax-free to the truck owner in this case is that it merely reimburses the owner for expenses incurred. |
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