car operating, ownership costs question

[Moneypenny]

Hi,

I am having trouble understanding these National Standards tables from the UST website.

If we have one newer car with loan, and one very used car owned outright, do we have an ownership cost of 496 for each of them? This cost I presume is for carpayments and upkeep? What if I dont have documented recent repairs on the old owned car?

I believe that the question for an old owned car was under debate last time I checked many months ago. Anyone know how this is going now? I am in Sacramento, CA

And this 496 (western census region) is monthly?

There is also a table for operating expenses, which I assume includes gasoline and maintenance? or which one is maintenance? in my region its 472 for two cars. Is that monthly too?

thanks!
MMP

[jennordhavn]

Here is a blurb from the IRS website. When you own the car outright, you use only operational costs, not ownership. Hope this helps.

Local Standards: Transportation

The transportation standards for taxpayers with a vehicle consist of two parts: nationwide figures for monthly loan or lease payments referred to as ownership costs, and additional amounts for monthly operating costs broken down by Census Region and Metropolitan Statistical Area (MSA). A conversion chart has been provided with the standards that lists the states that comprise each Census Region, as well as the counties and cities included in each MSA. The ownership cost portion of the transportation standard, although it applies nationwide, is still considered part of the Local Standards.

The ownership costs provide maximum allowances for the lease or purchase of up to two automobiles if allowed as a necessary expense. A single taxpayer is normally allowed one automobile.

The operating costs include maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls.

If a taxpayer has a car payment, the allowable ownership cost added to the allowable operating cost equals the allowable transportation expense. If a taxpayer has a car, but no car payment, only the operating costs portion of the transportation standard is used to figure the allowable transportation expense. In both of these cases, the taxpayer is allowed the amount actually spent, or the standard, whichever is less.

There is a single nationwide allowance for public transportation based on BLS expenditure data for mass transit fares for a train, bus, taxi, ferry, etc. Taxpayers with no vehicle are allowed the standard, per household, without questioning the amount actually spent.

If a taxpayer owns a vehicle and uses public transportation, expenses may be allowed for both, provided they are needed for the health, and welfare of the taxpayer or family, or for the production of income. However, the expenses allowed would be actual expenses incurred for ownership costs, operating costs and public transportation, or the standard amounts, whichever is less.

[pcn]

While the Means Test does reference IRS guidlines in many cases, it does not as a rule use the IRS guidlines. Depending on where you live, you can claim BOTH ownership and operating expenses.

[Moneypenny]

thanks for this info. sounds like it is something only a local lawyer knows. 9 months ago, a very good one told me its up in the air.

The IRS rules no doubt apply absolutely only to back tax payments, but how they are used by the BK court is another matter. I hope my 15 yr old car is not assumed to run on fountain of youth time-freezing magic mojo stuff. If so, the IRS and UST should contact God about their decision, and maybe God will accept it and extend that to our bodies as well. that would be great.

sorry, I'm loopy

MMP

[justbroke]

Let me differentiate what the IRS website may say and what the Office of the United States Trustee (UST) says. First, the IRS data is just used as input to the UST expense guidelines. This data comes from both the IRS and the U.S. Census.

Second, it really depends on which district you live in, whether you get the Ownership allowance or not. Almost every District will at least give you a $200 "ownership" allowance if the vehicle is either more than 6 years old or has more than 75,000 miles on the odometer.

So, I concur with what pcn just wrote above. It really does depend on your District too.

[Moneypenny]

so on sched j, can your "operating costs" exceed standards if they actually do? for instance operating costs include insurance, gas, parking (among other things) which can vary from person to person, not to mention car to car. Is it a flag if your operating costs are a little high? i have to pay my employer to park at work, and my car guzzles even though it officially is not supposed to (2009 honda accord).

if your district does allow an ownership cost for old vehicles, do you need to document that you actually have spent that?

these are sched j questions i am asking...


thanks MMP

[justbroke]

so on sched j, can your "operating costs" exceed standards if they actually do?

No.

for instance operating costs include insurance, gas, parking (among other things) which can vary from person to person, not to mention car to car. Is it a flag if your operating costs are a little high?

Yes, this is an indicator that you are not living within your means. The operating costs for two vehicles is about $400/month. If you're spending that much, you're in trouble anyhow.

if your district does allow an ownership cost for old vehicles, do you need to document that you actually have spent that?

It's an ownership allowance. It's $200 and is fixed for vehicles where you own them outright, they are over 6 years old, or have more than 75,000 odometer miles.

[Moneypenny]

thanks justbroke!
That's cool that if my district allows it, I get $200 for ownership for my old car.

but my eyes are popping out of my head: are you sure about that flat "No" on operating expenses, and does that include everything the IRS defines as operating expense?

So for my two cars all gas, tolls, parking, insurance, repairs, maintenance has to be 400 and change?

I have to pay my employer 150 bucks every three months to park at work. My car insurance is 288 a month due to speeding tickets, having one new car, and gap insurance (i guess the gap is technically ownership), and we use gasoline $240 a month on two cars which to me seems reasonable, given that I commute about 30 miles one-way (a guess) at work. So I am way over in actual expenses. All these expenses wont count on a sched J? Sched J is the same as the means test, end of story?

If that's true dont hesitate to tell me. I want the truth...

thanks again,

MMP

[justbroke]

The Operating cost differs by Region. For example, in the Northeast, the Operating Cost is $530 (outside defined metro area). So that will differ.

Schedule J has a catch all "transportation expense" category, so feel free to put whatever you want. Just be prepared if it's questioned. If you're in the land of the Tolls... NY/NJ/PA, then I think the regional "operating" costs category includes some of that and is why it's so high in the northeat.

[Moneypenny]

Thanks justbroke. I realize it varies by region and I know that for my region it is 496 for two cars, like i said originally

I wonder if you could do me a little favor. I was wondering about your answer of plain "no" are you sure about that? And does that include everything the IRS defines as operating expense?

So for my two cars all gas, tolls, parking, insurance, repairs, maintenance has to be 496?

All my operating expenses that exceed national standards wont count on a sched J? Sched J is the same as the means test, end of story?

This answer has caused me a lot of anxiety, but if its the truth I want to know it. Were you perhaps a little hasty in answering? Does anyone know the answer? Thanks so much to justbroke and everyone. I just want to know the truth.

thanks,
MMP

[justbroke]

I wonder if you could do me a little favor. I was wondering about your answer of plain "no" are you sure about that?

My "no" was more that you really shouldn't go over it. If the Trustee allows an exception, that's fine, but it's a red flag for a Trustee.

So for my two cars all gas, tolls, parking, insurance, repairs, maintenance has to be 496?

operating allowance: costs associated with insurance, normal maintenance, fuel, registration, parking and tolls

ownership allowance: costs associated with the lease or purchase of an automobile

Perhaps my "no" was a bit strong. The category for operating allowance already includes fuel, parking and tolls. If you're exceeding this for your particular locale, there may be a valid reason. Just put what you use for your operating costs, and see if it's objected to.