ASKING FOR HELP,,,analyzing annual cost to drive this truck for buisness

[TRQ427]

I see a lot of helpful input from members that are good at calculations. Here's my issue, the job I have pays us a fee based on a system called "MOTUS". Reimbursement rates are $238 monthly vehicle allowance and .14 cents per mile. I drive 60K per year. Assuming 4 year life cycle before vehicle is ready to be replaced (60K X 48 months + 240K miles,,time to go) Just jotting down some figures, assuming a 27K investment, annual insurance approx $ 800 per year, $800 for tires every 1.25 years, $33 a month to wash it, annual maintenance approx $100 a month, , $75 for oil change, and bank $25 per month for things like wipers, air filters, etc,, and so on,then yearly tag fees around $250, I figure vehicle cost around $785 per month for 48 months. That gambling on no repairs needed after 36K warranty period. Assuming fuel at $3.50 per gallon, 33 MPG average hybrid figures as most of my miles are high speed interstate usage,, monthly fuel costs around $528 per month. Anyway, if I'm even close to figuring this correctly, it looks like my ACTUAL costs would be $1313 per MONTH!! At my "current" Motus rate, I'm recieving approx $800 to $850 per month, with my current vehicle mileage around 22MPG,, I think I'm paying to play,,doesn't sit real well with me. Am I looking at this right?? I realize the truck would have some residual value at the end of 48 months, but I'm thinking maybe $4K since it would have 240K on it. Really appreciate any input on this. THANK YOU MUCH

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[NJ Pinelands]

Wow, only $800 a year in insurance ! Double that price in New Jersey and God forbid you get in an accident. On the other hand, $250 a year for registration/tags seems like a lot. Would be about $70-80 here. You are way ahead , though, with the insurance .

 

[brnpttmn]

You have to drive 5k miles a month for work and they're reimbursing you less than $1k? Yeah, you're getting screwed. Per IRS mileage reimbursement rates, by about $2k a month

 

[WesM]

Man you are getting majorly shafted on the millage rate. I know as a gov contractor when out on travel we got $.52 per mile.

 

[NJ Pinelands]

Aren’t you getting Free oil changes for life from your dealer ? Currently have that on my Chevy Colorado and am getting that with the Maverick. If clients don’t usually see your vehicle, you could skip the car washes. Also, look around, you should be able to get tires for less than $200, unless the Maverick has some unusual size. On a previous vehicle, I bought tires from Wal-Mart really cheap and they lasted about 40,000 miles.

 

[brnpttmn]

Man you are getting majorly shafted on the millage rate. I know as a gov contractor when out on travel we got $.52 per mile.

It's $0.585 for 2022. So they should be reimbursing him about $3k per month.

 

[brnpttmn]

Also, depending on how much you're making and how many hours you work, your employer could be breaking the law if your wage - mileage reimbursement underpayment goes below minimum wage. Your employer is essentially wage thefting you.

 

[WesM]

It's $0.585 for 2022. So they should be reimbursing him about $3k per month.

That makes sense, I have not traveled for the contractor since 2018.

to the OP, I would also say that if you are going to buy this vehicle, get it from one of those dealers offering lifetime powertrain warranties for free, that could prove to be incredibly valuable to you and might extend the usable life of your vehicle to 300k+ miles. Keep in mind there are hybrid escapes with 500k+ miles on them running for taxi services.

 

[brnpttmn]

That makes sense, I have not traveled for the contractor since 2018.

to the OP, I would also say that if you are going to buy this vehicle, get it from one of those dealers offering lifetime powertrain warranties, that could prove to be incredibly valuable to you and might extend the usable life of your vehicle to 300k+ miles. Keep in mind there are hybrid escapes with 500k+ miles on them running for taxi services.

Yeah. It jumped a couple cents this year because of the gas price increases

OP. Also make sure insurance is really only $800/yr for such high mileage.

 

[Mavman123]

I'll echo everyone else here saying you are not getting the correct mileage reimbursement. Should be following the standard IRS rate. Also, if you can learn to change the oil yourself, it takes about 15 minutes and costs about $30 for the oil and filter (atleast it does for my car, haven't priced maverick filters).

Also if you can, wash your own car. Takes about 15 minutes and you'll probably do a better job than one of those automated ones.

$800 for a set of tires for this truck is also very high. You can get a set of 4 decent tires for roughly $400 to 500 nowadays that'll last 50 to 65k miles easily. Shop around Walmart, Amazon, tire rack, etc.

 

[Rob Cactus Gray]

Something seems off to me

Motus says 56 cents a mile

 

[TRQ427]

Yeah, I was self employed for years, and I would by a driver from down south (rust free,, Im in iowa),, example my last truck was a 4 cyl stick S10 from a 68 year old lady in Fla. Bought it for 4K cash,, 42K miles,,drove it to 288K, it got around 30 MPG, deducted mileage at .57 , my accountant said after approx fuel costs,, i banked near 35K owning this truck. I've done it like this since 1983. I'm an 1040 employee now. I get it as far as mileage , but as an employee, I have no tax deductions like that. Apparently last year, our rip off government took away the mileage deduction for traveling 1040 employees, and the company I rep for (a very good automotive equipment and supply company) use this IRS approved system called MOTUS.

 

[APD]

at $0.14/mile you need to get 25 MPG just to break even on gas (@$3.50/gal).
If your job requires a pickup truck, there aren't many that would break even.
They better be paying you a very good salary to compensate for not providing you a vehicle.

If you were getting the IRS rate, you would be reimbursed for the purchase price of a maverick in one year of driving 60k miles. That seems reasonable since you are driving so much the vehicle will be done in 4 years.

You're getting screwed. I would talk to other employees and maybe collectively address the issue. If you need to drive that much for work, they need to either provide you with a vehicle (which they can deduct as a business expense) or provide you a reasonable rate since it is significant expense on your part to perform the job duties.

Home depot doesn't require employees to bring their own forklifts to work

 

[TRQ427]

I'll echo everyone else here saying you are not getting the correct mileage reimbursement. Should be following the standard IRS rate. Also, if you can learn to change the oil yourself, it takes about 15 minutes and costs about $30 for the oil and filter (atleast it does for my car, haven't priced maverick filters).

Also if you can, wash your own car. Takes about 15 minutes and you'll probably do a better job than one of those automated ones.

$800 for a set of tires for this truck is also very high. You can get a set of 4 decent tires for roughly $400 to 500 nowadays that'll last 50 to 65k miles easily. Shop around Walmart, Amazon, tire rack, etc.

Being in Iowa, tons of salt and slop, constantly below freezing, and tons of bugs in the warm seasons, washing your own vehicle not really an option,, maybe self serve high pressure in the warm times. Tires,, traveling over 35 years on the road,, I buy the VERY best Michelin's money can buy,, tire failure not acceptable on a dark interstate at 10PM at nite,, been thru all kinds of breakdowns and part failures after over 2 Million miles traveled. It truly pays to spend the money on the best tires, or replacement components possible,, and Michelin's aint cheap. I have been a factory sales, installation and training rep for a major wheel alignment, balancing and tire changer/brake lathe manufacture since 82,, I have my shops I patronize as far as vehicle service. As a past GM Master tech, years and years racing 4 speed NHRA stock Eliminator cars, I've paid my dues laying under cars, I'm getting old, other than a few colletor cars and an off road XJ that I take west for 4 wheeling, I don't do oil changes or any late modle work anymore. Part of getting old and fat.

 

[jsus]

They're not reimbursing you for the total operational cost of any vehicle there. That's barely more than fuel cost these days.

So, to respond to your request for help, we can't help you negotiate proper compensation with your employer here, since you're being massively under-compensated for actual expenses incurred on behalf of your employer. This is probably not the right forum for that.

As noted above, IRS mileage allowance is 58.5¢/mi, yet you're getting ~40¢/mi less. That base amount only bumps you up in that vicinity when you drive a bit over 500 mi/month, not 5000 mi/month. So it needs to be like 10x.

58.5¢/mi - 14¢/mi = 44.5¢/mi that would have to be made up by the base.

$238/month base / $0.445/mi = 534.8 mi/month

In total, you get $238 base + $0.14/mi * 5000 mi = $938.

IRS rates would have you receive 5000 mi * $0.585 = $2,925

For an under-payment of $1,987/mo, or almost 2/3.

Annually, that's $23,844/yr that, at IRS rates, you're subsidizing your employer out of your paycheck.

Per mile, you receive $238 base / 5000 mi + $0.14/mi = $0.1876/mi

IRS issues standard mileage rates for 2022

IR-2021-251, December 17, 2021

WASHINGTON — The Internal Revenue Service today issued the 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021,
18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021 and
14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

Notice 22-03 PDF, contains the optional 2022 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2022 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.

Source: https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2022

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