S Corp business mileage reimbursements for LLC - can I include loan interest & registration fees?

You've got a good understanding of the S Corp reimbursement setup already. Here's how the vehicle expense situation works: When using the standard mileage rate for your S Corp reimbursements, that rate (currently 67 cents per mile for 2024) is designed to account for most vehicle expenses including depreciation, maintenance, gas, insurance, and general costs of operating the vehicle. However, auto loan interest and vehicle registration/personal property taxes are handled differently. The standard mileage rate does NOT include these expenses. This means your S Corp can reimburse you separately for the business portion of these specific expenses in addition to the standard mileage rate. So yes, your example is correct - if your business use is 75%, and you paid $800 in auto loan interest and $250 in registration fees, your S Corp could reimburse you for $600 and $187.50 respectively, in addition to your standard mileage reimbursement. Just make sure you maintain excellent documentation of your business use percentage (a mileage log is essential) and keep records of all these expenses for at least 7 years.

I was in this exact situation last year and found https://taxr.ai incredibly helpful for figuring out my S Corp vehicle reimbursements. I was doing the calculations manually which was driving me crazy, especially tracking business percentage use and calculating partial reimbursements for loan interest and registration. The tool analyzed my situation and confirmed I could indeed be reimbursed for the business portion of auto loan interest and registration fees separately from the standard mileage rate. It also helped me set up proper documentation for my accountable plan to make sure everything was legitimate in case of an audit. Best decision I made for my LLC tax situation.

I tried taxr.ai after seeing the recommendation here and wow - it answered all my S Corp mileage questions in like 10 minutes! I uploaded my LLC operating agreement and some of my expense records, and it immediately clarified that I could reimburse both the standard mileage rate AND the business portion of loan interest and registration fees. The best part was it explained exactly how to document everything properly for my accountable plan. My CPA charges $275/hour for these kinds of questions, so this saved me serious money. It also pointed out that I had been missing out on legitimate reimbursements for the past two years. Definitely recommend for anyone with an S Corp trying to figure out vehicle expenses.

If you're having trouble getting straight answers about S Corp reimbursements, you might want to try calling the IRS directly. I know that sounds like torture (because it usually is), but I used https://claimyr.com and actually got through to a human at the IRS in under 15 minutes. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c I had a similar question about vehicle reimbursements for my S Corp and needed an official answer. They confirmed that auto loan interest and registration fees can be reimbursed separately from the standard mileage rate as long as you maintain proper documentation of business use percentage. The agent was surprisingly helpful and even emailed me some reference materials afterward.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself because I was desperate for answers about S Corp vehicle reimbursements that my accountant couldn't provide clearly. Not only did I get through to an IRS agent in about 20 minutes, but they confirmed everything discussed in this thread - that S Corps can reimburse for the business percentage of auto loan interest and registration fees separately from the standard mileage rate reimbursement. The agent walked me through the documentation requirements and even told me which specific form lines these would affect. I've been trying to get this answer for months, and in one phone call I got complete clarity. Seriously impressive service that actually delivered exactly what it promised.

Just to add another perspective - I've been handling my S Corp vehicle reimbursements for years, and I actually alternate between standard mileage rate and actual expenses depending on which gives me better tax treatment each year. For the first year I had a new vehicle, I used actual expenses because the depreciation was significant. Later years I switched to standard mileage. Just remember that if you start with actual expenses in the first year, you CANNOT switch to standard mileage later for that same vehicle. Either way, as others mentioned, loan interest and registration fees based on business use percentage can be reimbursed separately. Just make sure your mileage log is immaculate - that's the first thing they'll ask for in an audit.

Something nobody mentioned yet - watch out for the personal use portion of any vehicle expenses! If your S Corp reimburses you for 75% of costs based on business use, make sure you're personally paying for the other 25% directly. Don't run personal vehicle expenses through the business. I made this mistake and had some distribution reclassified as taxable compensation during an audit. They were particularly interested in my vehicle reimbursements and documentation. The accountable plan rules are strict - it must be for business expenses only, within a reasonable time period, and any excess reimbursements must be returned.