Is being paid for work mileage a money maker?

[Joggernot]

Originally Posted by ksa8907

I get paid $0.56/ mile tax free. So far this month ive driven about 200 miles and in the summer I will average around 400 miles/ month for work. Its a nice junk of change but by the time you factor in depreciation, oil changes, tires, alignments, suspension repair, maybe you hit a pothole?, etc. Its not like you are really making money at it.

Let's see...

$712.24 reimbursement
-151.82 for gas
$564.42
-400.00 for year for car ins. (scrap title, no comprehensive)
$164.42 left for wear and tear on the car

Texas highways don't have potholes, I do my own oil changes @$30, its a scrap car title so no more depreciation, probably $10 cost off the tires (1250/60000*$500), maybe another $5 for suspension,...

With this car it works out in my favor. If I had a nice new car without a scrap title, I might not break even.

[ksa8907]

Originally Posted by Joggernot

Let's see...

$712.24 reimbursement
-151.82 for gas
$564.42
-400.00 for year for car ins. (scrap title, no comprehensive)
$164.42 left for wear and tear on the car

Texas highways don't have potholes, I do my own oil changes @$30, its a scrap car title so no more depreciation, probably $10 cost off the tires (1250/60000*$500), maybe another $5 for suspension,...

With this car it works out in my favor. If I had a nice new car without a scrap title, I might not break even.

I too drive a car where the next owner will probably be the crusher, but not everybody does. One of my co-workers bought a new truck when his Tahoe crapped out and he hated putting miles on it. Now he has a company car instead and couldn't be happier. Depreciation is the biggest expense, but without it the extra money is nice.

[nemo]

Even if you have no depreciation consider the cost of a replacement.

[user removed]

My youngest brother is self employed and uses his truck for work. Bought new, he writes off depreciation and all other expenses combined until it is fully depreciated, then he writes off mileage at 56 cents (current rate). The truck is close to 10 years old and right at 100k miles.

I think he has written off close to $70k over that 10 years. He averages 25 MPG in a stripper Tacoma.

regards
Mech

[WilliamYH09]

I look at it this way:

The IRS business mileage reimbursement is more like an average. On average, their rate of $0.56/mile is how much it costs to own and operate a vehicle. However, since it's an average, your actual full expenses per mile could be lower or higher. Assuming you drive something around that average, you're not really coming out ahead, but you are having your full expenses be covered.

If you really want to know what profit you're bringing in from mileage reimbursement, you'll have to start keeping up with all your expenses and calculate them all per mile. It's not difficult at all. I do it all the time for my job delivering pizza.

Here are calculations you can use to determine your full vehicle expenses per mile:

Fuel

This site or Fuelly calculates it for you.

Depreciation

Keep up with the value of your vehicle each year and take the difference between the values from one year to the next and divide it by the number of miles you drove that year.

Interest (If vehicle was financed)

Calculate how much interest you paid during the year and divide that by the number of miles you drove that year.

Insurance

Add up your premiums for the year and divide that by the number of miles you drove that year.

Taxes/Tag

Divide the yearly cost by the number of miles you drove that year.

Maintenance and Repair

Either:

A. Record all your maintenance and repair expenses for the year and divide that by the number of miles you drove that year. Or...

B. Estimate it by figuring out the cost of every part of your vehicle and divide each of those by the number of miles you expect to get out of each part, then add them all together and add a little extra for emergencies/unforeseeable events.
__________

Add all those costs together, and you'll know your actual full vehicle expenses and can compare that to what you're being reimbursed. You may end up a little disappointed, but with the right vehicle you can make decent money off mileage reimbursement if you drive a lot of miles each year. 400 miles per month probably won't net you much money. 4,000 miles per month would.

[jamesqf]

Originally Posted by WilliamYH09

Insurance

Taxes/Tag

Not really fair to include those, unless the vehicle is just for work, because they're the same no matter how much you drive.

On the larger question, a few years ago when I drove a lot for work, I was making money just on the IRS mileage deduction, with no employer reimbursment. But of course that was with a used Insight, bought for cash (and at a real steal of a price, too).

[California98Civic]

My employer gives me $0.56 too. But my civic is ridiculously cheap to operate: 60+ mpg and all the maintaining DIY. Not much value left to depreciate. My per-mile costs must be 15 cents if they're very high, maybe 12 cents is closer to reality. I always use my car for work related trips, as a result.

[WilliamYH09]

Originally Posted by jamesqf

Not really fair to include those, unless the vehicle is just for work, because they're the same no matter how much you drive.

Maybe so for the taxes/tag, but that isn't always the case for insurance. To use your vehicle for commercial purposes, you will need commercial coverage unless you want to risk not being covered and then dropped if you do get in an accident during work. Therefore, the extra you have to pay for commercial insurance should be calculated in.

Originally Posted by jamesqf

On the larger question, a few years ago when I drove a lot for work, I was making money just on the IRS mileage deduction, with no employer reimbursment. But of course that was with a used Insight, bought for cash (and at a real steal of a price, too).

How so? A deduction will only earn back a percentage of IRS rate multiplied by your miles driven. How could that cover the expenses you paid while driving?

[mcrews]

It's been forever since I was paid mileage.
(im self-employeed) but isn't the paid mileage rate from your employer a taxable event?

[California98Civic]

Originally Posted by mcrews

...isn't the paid mileage rate from your employer a taxable event?

Yes, in my case it comes in my check, subject to auto deduct.