Blog describes applying percent of business use, but how?

EQuinn

Hi,
It seems in Wave, you are able to enter a full expense all year long and later apply percentage to that category to reflect amount of personal or business use.

In the blog post "Tax deductions: Vehicle expenses" (found here: https://www.waveapps.com/blog/accounting-and-taxes/tax-deductions-vehicle-expenses ). Under the second point "2. Deductions per percentage of business use", the author (Ash Christopher) states the following.

"Applying this percentage to every expense you incur over the course of the year can be a pain. So a better way to do it is this: For any type expense that is X% personal and Y% business, put the entire expense, all year long, into either the personal or the business expense category. Then, at the end of the year, take the total of that category and apply the appropriate percentages."

Once one has entered in the "entire expense, all year long", can you or anyone describe in more detail how to "take the total of that category and apply the appropriate percentages"?

Thanks

EQuinn

I corrected the link in the post above. The ")" was included for some reason.
https://link.waveapps.com/blog/accounting-and-taxes/tax-deductions-vehicle-expenses

AlexL

Hey @EQuinn , glad to see you're making good use of our blog articles as that's what they're there for! Now on to your question. Let's say you posted $10,000 of personal miles in an account (since the blog has directed you to post everything into a single place). If you know that you're claiming 50% of it as a business expense, then you calculate that 50% of your total would be $5000 claimed. This way, you don't actually have to make these calculations on a per transaction basis.

EQuinn

Thank you for replying. I was looking for a little more specific information. However, I have a general lack of accounting experience and maybe I need to improve my accounting methods.

As it is, I made an account "reimbursement for vehicle expenses" as a "credit card" described here:
https://support.waveapps.com/hc/en-us/articles/115005928103-How-to-account-for-reimbursements
I put all vehicle expenses ($4,000 paid from personal funds) in that account. At years end I found 30%/70% business/personal use so I refunded myself the 30% business part. Now there is 70% of $4K sitting in that account looking like I still need to reimburse myself. Should I make some transaction to wipe it out? How should I have handled this?

Thank you for your time.

JulianP

Hey @EQuinn !

I don't believe recording this as a reimbursable expense is the correct workflow to use in this case. With that being said, I'm afraid that we here at Wave support are not accountants so our insight here is limited. As mentioned in the blog post, different rules apply to each jurisdictions, and this is one area where rules change frequently. Make sure that you’re aware of the rules that apply to your situation and I suggest reaching out to an accountant to help you handle your vehicle expenses so you’re all prepared for your tax filing. I wish I could be more help here.