If you run your business through an S corporation and use your personal car for work, it might seem easiest to just track mileage and move on. But here’s the catch: the vehicle isn’t owned by your business, and that creates some unique rules you need to be aware of.

I’ve seen a lot of clients miss tax opportunities—or run into audit issues—just because they didn’t handle this situation properly. So let’s clear it up.

First, You Can’t Just Deduct Everything

If your car is in your personal name, your S corp can’t directly write off the vehicle payments, insurance, or depreciation. Why? Because it doesn’t own the car. It’s technically someone else’s asset—you, the shareholder-employee.

But you can get reimbursed.

The Accountable Plan Is Your Best Friend

Here’s how I usually guide clients: set up something called an accountable plan. It lets the S corp reimburse you for business-related expenses, like mileage or a fair portion of actual vehicle costs. That reimbursement is:

• Tax-deductible for the S corp

• Tax-free to you, the owner

You’ll need good records, of course—logs of business miles, receipts, and calculations. But the benefit? You avoid messy personal/business crossover, and you stay on the IRS’s good side.

What If the Corporation Wants to Own the Car?

That’s an option too—but it brings its own challenges. If the car becomes corporate property, you’ll owe personal tax on any personal use of the vehicle. The company may need to track personal mileage and add that value to your W-2.

Sometimes it works, especially if the vehicle is used 100% for business. But more often, keeping it personal and reimbursing yourself is cleaner and safer.

Final Thoughts

If you’re using your car for business under an S corp, don’t guess your way through the deductions. The IRS cares how it’s structured—and the wrong move can cost you.

Let’s make sure your setup works in your favor, not against you. Book a call with me and I’ll help you map out the best path.