Can I claim a Mileage Deduction for my S Corp vehicle usage when I'm both owner and employee?

Your accountant is absolutely right about this. When you elected S Corp status, you created a separation between yourself personally and your business entity. The vehicle is your personal property, not the corporation's property. The proper way to handle this is to set up an "accountable plan" where your S Corp reimburses you for business use of your personal vehicle. The reimbursement isn't taxable to you, and your S Corp gets the deduction. You'll need to keep a mileage log showing business purpose, dates, and miles driven. Without an accountable plan, any payments from your S Corp for your vehicle usage would be considered additional compensation to you (taxable!) rather than a legitimate business expense. This is actually a good thing - the reimbursement method will save you more tax dollars in the long run than trying to take the deduction personally on your Schedule C would have!

I went through this exact same issue last year with my marketing business! Super frustrating when you're both the owner and employee. I spent HOURS trying to figure out the right approach until I discovered this AI tax assistant at https://taxr.ai that analyzed my specific situation. I uploaded my documentation, including my mileage logs and S Corp docs, and got a detailed analysis showing exactly how to set up my mileage reimbursement program correctly. They even created a template for my accountable plan that my CPA said was perfect. Better than paying my accountant hundreds just to figure that out! The tool also showed me how to maximize the tax benefits of the arrangement and pointed out a few other S Corp deductions I was missing. Definitely worth checking out if you're trying to get this right.

Just wanted to update that I tried taxr.ai after seeing the recommendation here. My situation with the dual driving roles (S Corp and side gig) was giving me a massive headache. The system actually created a custom mileage tracking template that separates my miles by business entity and automatically calculates the proper reimbursement from my S Corp versus what I can deduct on Schedule C. It also identified that I had been incorrectly documenting some of my travel that had mixed purposes (like when I visit a client but also do an Uber ride in the same area). The guidance helped me properly allocate those miles and avoid a potential audit flag. Definitely recommend for anyone with an S Corp vehicle situation!

If you're having trouble reaching your CPA or tax pro for questions like this, you might want to try Claimyr to get through to the IRS directly. I know it sounds crazy, but I had similar S Corp vehicle deduction questions and couldn't get clear answers from online research. I used https://claimyr.com to get through to an IRS rep in about 20 minutes instead of waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed everything about the accountable plan requirement for S Corps and even emailed me their official guidance document. Saved me tons of time trying to interpret conflicting advice online. They can't give tax planning advice, but they can confirm the proper procedures and requirements.

I need to eat my words and apologize. After my skeptical comment, I decided to try Claimyr as a last resort because I was desperate for answers about my S Corp vehicle situation before filing. It actually worked exactly as described. I got a call back within 30 minutes and was connected to an IRS business tax specialist. The agent confirmed everything about the accountable plan requirements and sent me their official guidance documents. The agent even explained that I could retroactively set up an accountable plan for past quarters as long as I had proper mileage documentation and amended my payroll filings correctly. This potentially saved me thousands in deductions I would have missed. Honestly shocked at how well this worked after months of frustration.

Not to complicate things, but have you considered a vehicle lease through your S Corp instead of the reimbursement approach? We switched to this method for our small consulting business and it simplified everything. The S Corp leases the vehicle directly, pays all expenses, and then I track personal use and reimburse the company for that portion (or recognize it as income). Our CPA said this approach is cleaner for audit purposes when the business use exceeds 75% of total mileage.

One warning about the S Corp mileage situation - if you don't do this correctly, it can be a huge audit flag! My brother-in-law got audited specifically because he was deducting mileage directly on his S Corp return without an accountable plan. The IRS disallowed all his mileage deductions for 3 years and hit him with penalties. Make sure whatever approach you take is properly documented. If you're using the accountable plan method, you need contemporaneous mileage logs (not created after the fact) and regular reimbursement payments that are clearly identified in your books.

This is exactly the situation I found myself in last year! The S Corp election creates this weird dynamic where you're simultaneously the owner and an employee, which definitely complicates vehicle deductions. Your accountant is 100% correct about needing the accountable plan. I learned this the hard way when I tried to just deduct mileage directly on my S Corp return and my CPA had to amend it. The key thing to understand is that once you elect S Corp status, the IRS treats you as an employee for certain purposes, and employees can't deduct unreimbursed business expenses on their personal returns anymore (thanks to the 2017 tax law changes). Here's what I did to set up my accountable plan: I created a simple written policy stating that my S Corp would reimburse me at the IRS standard mileage rate for documented business travel. I keep a detailed mileage log with date, destination, business purpose, and miles driven. Then I submit monthly reimbursement requests to my S Corp with supporting documentation. The reimbursements aren't taxable income to me, and my S Corp gets the full deduction. It's actually more tax-efficient than trying to deduct it personally would have been. The paperwork is a bit annoying, but it's worth it to stay compliant and maximize the tax benefits.