high mileage car expense on the means test

[ThreadsSnapping]

1st you can override the IRS allowed expense as long as you have documentation ready if they ask for it. Also, the additional vehicle expense has nothing to do with if the car has a lien on it, because the additional amount is in regards to the operating of the vehicle not the ownership. And lastly, regarding Schedule J, you can put whatever amount you want as long as you can back it up, and it is a reasonable expense for your situation.

Directly from the IRS site. I have included the whole section. Here is the direct link: http://www.irs.gov/irm/part5/ch08s05.html#d0e90428Therefore, in situations where the taxpayer owns a vehicle that is currently over six years old and/or has reported mileage of 75,000 miles or more, an additional operating expense of $200 will generally be allowed for the collection period that remains after the loan/lease has been "retired" plus the operating expense.

Note:
This also applies to those taxpayers that have no loan/lease on a vehicle over six years old and/or has reported mileage of 75,000 miles or more.

Example:
The taxpayer, who lives in the Midwest Region, owns a 1995 Ford Taurus, with 90,000 reported miles. The vehicle was bought used, and the auto loan will be fully paid in 30 months, at $300 per month. In this situation, the taxpayer will be allowed the ownership expense until the loan is fully paid; i.e., $300 plus the allowable operating expense of $231 per month (unless less is claimed), for a total transportation allowance of $531 per month. After the auto loan is "retired" in 30 months, the ownership expense is not applicable; however, at that point, the taxpayer will be allowed a $200 operating expense allowance, in addition to the standard $231, for a total operating expense allowance of $431 per month.


Example:
The taxpayer who owns a 1998 Chevrolet Caviler with 50,000 miles, will be allowed the standard of $231 per month (unless less is claimed) plus $200 per month operating expense (because of the age of the vehicle), for a total operating expense allowance of $431 per month.
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After reading the above highlighted parts it sounds to me like you can take either the ownership & operating expenses if you have a loan OR operating & the extra $200 but you can't take ownership, operating & the extra $200. At least thtat is how I am interpreting it. Of course, some districts may allow you to take all three of them.

TS

[BKParalegal]

The reality of it is, it is very rare if ever that someone is financing a car that is 6 yr's old and has over 75k miles. Please spare me the people who are, I said rare not never. Hence this is why the additional deduction was written with that in mind

[rwphil]

Has anyone verified this with an attorney or a case example? I believe the IRS guideline being referenced is for determining payment plans on back taxes and does not necessarily have anything to do with the means test. Not all IRS payment plan guidelines apply to the BK Means Test. It would be nice if this one applies (I have one such car), but I'm skeptical.

They don't give you much of an allowance on the means test for transportation expenses(especially with the high price of gas) but I found a little gold nugget of info that if you car is over six years old and/or over 75,000 miles you can claim and additional $200/ month expenses. It is in the IRS financial handbook, part 5, chapter 8, section 5.8.5.5 (3) I don't know if that is common info or not because I really had to dig to find it. Thought I would share in case people didn't know!

[berrymom31]

basically, if you have a payment...that is probably more than the 200 allowance anyway.....we do have two older cars with notes..but the payments are each over 200 per month...so we are better off with the payments on the means test than the 200 each.

[Yankeegirl]

Our attorney is the one who told us about the $200 "allowance". We used it on the means test and the UST did not question it.

Our case was dismissed for other reasons, this was definitely allowed on the means test in our district.

[ThreadsSnapping]

The reality of it is, it is very rare if ever that someone is financing a car that is 6 yr's old and has over 75k miles. Please spare me the people who are, I said rare not never. Hence this is why the additional deduction was written with that in mind

Really, I have 2 such cars. Both were 4 or 5 years old when we bought them and one of them had over 75K miles. I'm thinking anyone who buys and finances a car that is more than 2-3 years old at the time can very easily have a car this is over 6 years old and still financed.

TS

[BKParalegal]

Really, I have 2 such cars. Both were 4 or 5 years old when we bought them and one of them had over 75K miles. I'm thinking anyone who buys and finances a car that is more than 2-3 years old at the time can very easily have a car this is over 6 years old and still financed.

TS

I knew someone would come back with their situation. Are you also going to tell me that Pitbulls are the sweetest dogs, because you have one and it has never bit anyone, so based on that all Pitbulls are sweet. I said rare not never, be proud you are rare!

[ThreadsSnapping]

I knew someone would come back with their situation. Are you also going to tell me that Pitbulls are the sweetest dogs, because you have one and it has never bit anyone, so based on that all Pitbulls are sweet. I said rare not never, be proud you are rare!

I'm not rare. I know more people who have 6 year old cars that are financed than who don't. Do you think that no one buys a 3-5 year old car and finances it? And most of the loans will take it past the 6 year mark and still have payments on it. I have a friend that owns a used car lot and sells a lot of 3-5 year old cars that end up with 5 year loans. Just because you rarely see it doesn't mean it's rare.

TS

[BKParalegal]

How is your sweet Pitbull?

[ThreadsSnapping]

Whatever. Just because you don't see it, doesn't mean it doesn't happen fairly often. If you chose to ignore that fact, so be it. But it is not a rare thing to have a car 6 years or older that is still financed. You can choose to live in your own little world but I choose to live in reality and see what is right in front of me. I'm not commenting on this anymore.

TS

[BKParalegal]

I love the parting shot and then the I am taking my bat and ball and going home comment. I file on average 2 to 3 bankruptcies a day, not a week, not a month, not a year, but a day. I may be in my own little world, but I guarantee, my BK world is a tad larger than yours. So, I don't speak like I am expert based on 1 case or even 2 cases, but on hundreds of cases that I deal with. So lighten up Francis, and my suggestion is to take your one of kind sweet Pitbull for a nice leisurely drive in your rare vehicle loan.

[Yankeegirl]

When we originally filed last year, my car was 3.5 years old with 80,000 miles on it! We bought it new and were still paying on it!! So you don't have to finance a high mileage used car to be in the same situation!