Were you an employee of the real estate company, or were they using you as an independent contractor? You may be able to determine this - if the company was withholding FICA and Medicare from your check, then you were an employee. If not, then they were probably treating you as a contractor.
As mentioned elsewhere, you need to have a contemporaneous record of the miles you drove.
If you were an employee:
1) The $125 is not a reimbursement, it's an allowance, so it's taxable income. It'll be added into your W-2, and you will report this on your 1040.
2) Since your company didn't do expense reimbursement, you can claim the 50 cents a mile. The amount is entered on your Form 2106 - Unreimbursed Employee Expenses, and are then rolled over onto your 1040 Schedule A.
3) There are two gotchas with this. Since unreimbursed employee expenses are considered a miscellaneous deduction,
there's a 2% AGI floor (you have to have miscellaneous deductions of at least 2% of your adjusted gross income in order to deduct them.) Also, your Schedule A deductions need to total more than your standard deduction before it makes sense to itemize. So there is a pretty small chance that you'll realize any effective benefit.
If you were an independent contractor:
1) The $125 will again be taxable income. It will be reported to you on a 1099-MISC, and you will enter that amount on your Schedule C.
2) You can claim the 50 cents a mile as a business expense on your Schedule C. This is one of the expense items that comes "off the top" in calculating your business profit or loss.
3) Then you would continue on with your Schedule C, Schedule SE (here's where you will pay your FICA/Medicare), and make those entries onto your 1040.
dawgdays · 5 years ago