Help with a car/fuel/money math problem

[NickfromWI]

I am trying to "settle" with my employer on what the mileage reimbursement rate is when we use personal vehicles for business. Where I used to work, they just used the IRS rate (currently set at 55 cents/mile). My boss thinks this is ridiculously high, and I agree with him.

If I bought a new car...say $25,000, used it for 100,000 miles at work over a couple years, I would have made $55,000 over a couple years. Enough to buy a brand new car and the gas every year! This just doesn't sound right.

So how much SHOULD it be? I can't quite figure it out.

The work vehicles are trucks and vans getting about 14 miles to the gallon, so a 200 miles trip would run, just over 14 gallon or about $28 in gas.

A two hundred mile trip at say...30 cents a mile would get me $60. The average car is getting around 25mpg...so that'd be 8 gallons for the 200 mile ride. Thats 16 for the gas and $44 for everything else. Upkeep and depreciation, and insurance, too.

Anyone know how the IRS got 55 cents? I want to make sure I'm not shooting myself in the foot here by settling for 30 cents.

love
nick

 

[Paul B]

the one place I work for wages is $.30 per km, not a big remuneration but better than a kick in the a$$.

 

[CurSedVoyce]

Seeing you are in the US Nick.. The company you work for should use the same figures as the IRS.. IMHO
Now... If your employer is like me and you also keep a log of miles for work.. Employer pays the FUEL reimbursement and then you claim the rest on your taxes less the reimbursement. Thus the employer gets a simpler tax deduction and you get one also

Granted you better have copies of all the receipts with the mileage written on them that match your log in case of audit .

 

[Al Smith]

You can't just do it for gas money .Nor can you actually depreciate the vehicle unless you are a company or otherwise somehow have it set up that way .

Very few people actually keep accurate records on exactly how much it costs to own and maintain a motor vehicle but it's more than most think .

As far as the IRS ,they list the guidelines but you are supposed to keep a daily log .This is a monumental pain in the butt .

 

[SkwerI]

My old man taught me that the price of gas is only a small part of the cost of owning a vehicle. You have to account for ALL expenses related to owning that vehicle including insurance, maintenance, repairs and even if you have to pay for a place to park it.

In my early 20s I worked for a moving company (Apartment Movers) where I'd pull their trailer with my truck. The mileage figures they paid me looked great on paper but after a year I realized I had put 35K miles on my truck and the maintenance, repairs, fuel and insurance were WAY more than what they paid me in mileage. I was simply sucking equity out of my truck.

A little econobox is obviously less expensive to operate, but the IRS number is an average for all vehicles. If you want to use your car in exchange for gas money, go for it.

 

[Newfie]

The IRS mileage deduction was $0.30 twenty years ago. Don't forget that gas was $5 a gallon not long ago and might very well be again. The IRS isn't in the habit of "giving" anything away, so that number is that high for a reason. Don't forget oil changes, belts, fluids, grease, tires (2 sets these days), and all of the other misc taxes, fees and crap that happens that we don't plan on. Crunch you numbers again with real values and not "averages" and see where you come out. Also check the IRS code, he may be required to pay that rate if he is going to reimburse you by the mile.

 

[Blinky]

$0.55 per mile is a reasonable rate, especially if you aren't getting paid for the windshield time.

 

[sotc]

he better be getting paid drive time also. how much is a new transmission in case it goes out? have you checked with your insurance company to find out how much more they will charge when you tell them your using your vehicle for work?

 

[lumberjack]

My car gets better milage. I figure with current gas prices ($1.70) and a conservative milage estimate w/o a trailer (32mpg**) I figure it costs me approx 23.0cpm, when gas was $4.15 the total was 30.6cpm.

Breakdown:
$.053 Fuel
$.006 Tire wear
$.006 Oil Change
$.002 Annual Tag and Inspection*
$.043 Depreciation, (Initial Cost/Life Expectincy)
$.12 Insurance (Freakin high, I know)*
$.230 Per Mile

*: Figured at 24k miles per year.
**: Gas w/o ethanol average mpg= 37, 34mpg w/

 

[sotc]

oil change costs more than fuel?

 

[lumberjack]

Fixed, left out a 0.

Figured at 5k mile interval, Mobile 1 and Fram filter, $30.
Changed it yesterday @ 6kmile interval, which would be $.001 cheaper per mile.

 

[sotc]

haha, i was thinkin you needed new rings

 

[lumberjack]

 

[Frans]

What about the average credit rating of a person who needs to drive their car for work?
That can effect the total cost of the vehicle by alot.

 

[lumberjack]

That could be included in your depreciation.

For example, I paid $7400 for my car, I figure it'll go 240k miles, it had 67,666 when I got it. So $7400+ whatever it cost if it was financed/the remaining estimated life=per mile.

I've heard credit rating can affect insurance rates, but I've never seen that. Is financing expense what you were talking about?

Simplistic but that's why they have fudge factors.

 

[Jonseredbred]

I'll bet your employer is charging more than that .55 cents per mile.

I know I do.

 

[Frans]

inancing expense what you were talking about?

Yes

 

[sawinredneck]

Figure it this way also Nick, the average expectancy of a car is around 100k miles (a good average), so you put on 100k miles on your car, maintain and repair it FOR THE COMPANY, why shouldn't they buy you a new one?
Really if you are driving that much it might be in the best interest of the company to lease you a car, pay for the maintanence of it, and supply you with a fuel card. Tax write offs all the way around.
I personally think it's foolish of you to put that much wear and tear on your personal vehicle and not expect a replacement! I was alloted $.65 a mile at my old job, granted I didn't drive anything like that, bu I certainly kept track of my mileage.

 

[Al Smith]

You can take the cheapest thing made and get over a hundred thou on them . Actually they will go just as long as you are willing to wrench on them ,how well I know .

Something to bear in mind .If somebody pays you less than 55 per mile you can take the remainder off your taxes .

Sound good ? Think again ,it's the law of diminishing returns . If you are in the twenty percent tax bracket you have to spend 5 bucks to save a buck in taxes . Now it 's not so good eh .

 

[sawinredneck]

You can take the cheapest thing made and get over a hundred thou on them . Actually they will go just as long as you are willing to wrench on them ,how well I know .

Something to bear in mind .If somebody pays you less than 55 per mile you can take the remainder off your taxes .

Sound good ? Think again ,it's the law of diminishing returns . If you are in the twenty percent tax bracket you have to spend 5 bucks to save a buck in taxes . Now it 's not so good eh .

And you are correct Al, but at a point, unless you do EVERYTHING yourself, it's a loosing battle, even then it's costly.
My point?
When I talk to people looking at cars, I tell them they are going to pay either way. Either you make the car payment and have a reliable car you don't have to work on. Or you pay to keep up with the repairs on an older car that will be breaking down, and probably at the worst times, and working on it/having it worked on.
Either way is money out of pocket.

 

[Al Smith]

An automobile is like a giant baby bird with its' mouth open --feed me --feed me .

 

[No_Bivy]

55 sounds OK......fuel will go back up no doubt