Ask the tax adviser
By George Saenz • Bankrate.com

March 24, 2000 -- Today, the tax adviser explains how to deduct business mileage on a personal car used for business purposes and what to do if you can't get a W-2 from an employer.

Business mileage deductibility

Dear Tax Talk:
My company reimburses my mileage at a rate of 13 cents per mile. I usually drive about 1,000 miles a month for business purposes. Can I deduct what's left, based on the federal rate of 32 cents per mile? In other words, can I deduct 19 cents per mile on my taxes? Thanks.

Jason

Dear Jason:
The standard mileage for 1999 is 32.5 cents per business mile driven before April 1, 1999, and 31 cents per business mile driven after March 31, 1999. The difference between the standard mileage rate and the amount you were reimbursed is deductible as an employee business expense. Complete Form 2106, Employee Business Expenses, to claim the difference. Report the reimbursement your employer paid on line 7 of form 2106, IF the reimbursement was not included in your Form W-2. Usually an employer will not report mileage reimbursements on Form W-2, if you account to them for the business miles driven. Alternatively, an employer is required to include in your Form W-2 an auto allowance that is not accounted for based on business miles driven.

You also have the option of claiming your actual automobile expenses rather than the standard mileage rate. You may want to consider actual expenses if you have a newer car, a leased car or live in an area with high automobile insurance premiums. You cannot use actual expenses if you previously claimed the standard mileage rate on the same car in an earlier year. Reduce your actual expenses by amounts that were reimbursed and not reported on your Form W-2.

Your actual expenses or standard mileage rate only applies to the business miles driven compared to total miles driven in the year. In completing Form 2106, use a reasonable percentage considering personal use of the automobile including to and from work.

Missing W-2 and erroneous taxes

Dear Tax Talk:
My grandson's employer last year held out about $1,400 for state taxes. But we live in Florida and there is no state tax. My grandson was the only employee of this business, but the employer won't give my grandson a W-2 form so he can file his income tax. What can he do about this? Without a W-2 form how can he file his income tax? Please let me know. Thank you.
RGM

Dear RGM:
I live in Florida and I know we don't have a state income tax. Does your grandson know which state's taxes were supposedly being deducted? He'll need to know this in order to file for a refund in that state.

An employer is required to provide Form W-2 by January 31, 2000. Since your grandson did not receive a Form W-2 by then and assuming the employer still won't give him one, he will need an alternative method to establish his gross wages and federal income tax withheld. He can accomplish this if the employer gave a detailed paycheck stub. If your grandson does not have detailed check stubs, have him try to recreate as best as possible what the gross and net wages were by pay period. He will also need the employer's name, address and ZIP code and, if possible, the employer's identification number.

If he has a Form W-2 from an earlier year from the same employer, the employer's identification number will be on it. Once he has this information, your grandson should call the IRS at 800-829-1040. IRS will work with your grandson to provide him with a substitute form W-2, IRS Form 4852.

If he can't reach the IRS by phone (it's generally very busy), he can try completing Form 4852 and attaching as much documentation as possible and submitting it with his Form 1040. This will delay any refund. Alternatively, he may want to request an extension of time to file by filing Form 4868 by the April 17 deadline. Form 4852 should also be sufficient for the state income tax filing.

You also can check out Bankrate.com's Tax Tip on forms you need to file your return.

-- Posted March 24, 2000

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