Mileage Standard IRS deduction - how to record

[CD]

I would have thought I would have found something on this from a search, but I haven't.

What is the best practice for recording mileage on business trips and what are the accounts that are used for this if you are using the IRS standard deduction per mile?

Does a new commodity/currency need to be created for this?

[Chary Chary]

Hi,

disclaimer: I am not an accountant, I am not from the US.

But let us just think together.

The only reason you would want to use beancount to record the IRS deductible mileage instead of just writing it somewhere on a paper is to be able to track the future tax refund.

So, this is how I would do it:

================================================================

; https://groups.google.com/g/beancount/c/oBLRF71jDqY

2020-01-01 commodity MILE

2020-01-01 commodity USD

2020-01-01 open Assets:Bank:Checking USD

2020-01-01 open Assets:Deffered-Tax

2020-01-01 open Income:Tax-Refund:Car-Mileage

2020-01-02 * "Driving car somewhere, which is tax deductible"

  ; I think you need to put here not the actual rate (e.g. 65.5 cents/mile), but expected tax return you will get. Let us assume 0.3 USD/mile

  ; also cgeck this https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/deferred-tax.html  

  ; and this ; and this https://getswipe.in/blog/post/concept-of-deferred-tax-and-its-presentation-in-financial-statements  

  Income:Tax-Refund:Car-Mileage   -100 MILE @   0.3 USD

  Assets:Deffered-Tax              30 USD

2020-03-02 * "Tax authorities" "Tax refund received"

  Assets:Bank:Checking         40 USD

  Assets:Deffered-Tax  -40 USD

; You will probably never guess the tax return 100% correctly, so you will need to pad it

2020-03-02 pad Assets:Deffered-Tax Income:Tax-Refund

2020-03-03 balance Assets:Deffered-Tax 0 USD  

;===============================================================

Does it make sense?

[CD]

Thanks for taking the time to do this!

It does make sense.

I don't fully understand the "pad" directive yet.  I guess I do theoretically - it's sort of like creating an opening balance?  But in practice it seems confusing to me.  

Everything else though makes sense to me, but couldn't the actual rate be used and be put in as an expense, since it's going to be removed from the gross income (I think - I'm not an accountant either).  

I guess that would make it tricky how to book them though and income would seem necessary no matter what.

I'm going to play around with what you wrote and will reply more soon.

Thanks again.

[Chary Chary]

I have created a google collab, where I have slightly updated the code and added more comments

You can experiment with it

https://colab.research.google.com/drive/1FRttWZWgphX5SSZnViF5GlV6FDPGhbbT

[Chary Chary]

On Wednesday, February 28, 2024 at 7:33:42 PM UTC+1 CD wrote:

Thanks for taking the time to do this!

It does make sense.

I don't fully understand the "pad" directive yet.  I guess I do theoretically - it's sort of like creating an opening balance?  But in practice it seems confusing to me.  

It just saves you some manual calculation. 

In my new example it will automatically add the following entry. I

2021-03-02 P "(Padding inserted for Balance of 0 USD for difference 10 USD)" Assets:Deffered-Tax:Y20 10 USD Income:Tax-Refund:Car-Mileage -10 USD

 

[CD]

OK.  I think I have this figured out.  

Unfortunately I don't think the deferred method you are suggesting will work well in the US, because from my understanding it's used as an expense to reduce overall income (which in turn reduces your taxes).

So I am going with something like this...

2017-01-01 open Equity:Miles
2017-01-01 open Expenses:Consulting:Mileage

2024-01-01 price MILES 00.67 USD ;IRS standard mileage deduction 2024

2024-01-04 * "XYZ Company Paid Invoice" "Completion of Project XXX"
    ; Project for XYZ company at Site XXXX
  Assets:Banking:MyBank                       1000.00 USD
  Income:Consulting:XYZ         -1000.00 USD                        
  Expenses:Consulting:Mileage                         227.8 MILES
  Equity:Miles                                -227.8 MILES

Then in FAVA I can then click "Converted to USD" to see the mileage expense in USD and also removed from my net income on the Income Statement.

Or I can click on Units and see it separated out as MILES.