Does my work vehicle allowance count as taxable income?

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WHL
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Does my work vehicle allowance count as taxable income?

Post by WHL » Sun Feb 15, 2015 2:20 pm

My W-2 income includes $9000 that I receive for a vehicle allowance. As I am using my personal vehicle for work purposes, is this deductible or non-taxable income? I'm sure I'm not using the right term, but I'm sure you catch my meaning. I drove ~30k miles for work in 2014. I don't have a true log of miles driven, but I have every receipt for the fuel that I expensed, and I record the miles driven on each fuel receipt. I also have a complete calendar of my work events, so I know where I was, and can guesstimate the miles I drove - if necessary.

Thanks,

WHL
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Re: Does my work vehicle allowance count as taxable income?

Post by WHL » Tue Feb 17, 2015 2:27 pm

didn't expect zero replies!

I filed my taxes yesterday and didn't worry about the miles driven. Hopefully I didn't leave excessive money on the table...

WHL
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Re: Does my work vehicle allowance count as taxable income?

Post by WHL » Mon Feb 23, 2015 9:00 am

Again...ttt.

retiredjg
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Re: Does my work vehicle allowance count as taxable income?

Post by retiredjg » Mon Feb 23, 2015 9:10 am

It is surprising there are no replies. This is the type of thing that somebody here usually has some knowledge about.

I suspect the expense is deductible in some way. I know when I worked for the government, the cost of moving my household from one place to another was added to my income. Then I turned around and subtracted it from my income. This situation seems similar in at least some ways.


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BL
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Re: Does my work vehicle allowance count as taxable income?

Post by BL » Mon Feb 23, 2015 9:24 am

I hope you get someone knowledgeable to help. I believe you are saying that it includes the extra $9000 in your Box 1 income (and Box 2 as well?) and is not listed elsewhere on your W-2?

I Googled and found a couple possibilities to check:
http://www.irs.gov/publications/p463/ch06.html

http://www.irs.gov/pub/irs-pdf/i2106.pdf

I would definitely get a notebook and reconstruct last year's expenses and get another one going for this year.
Going back and forth to work is of course not part of this.

EDT: I see others found these while I was looking!
I see a 1040X in your near future! Yes, you left money on the table!
(no. miles driven) X (Standard mileage) X (your tax rate (also state tax)) is probably significant.
Last edited by BL on Mon Feb 23, 2015 9:31 am, edited 1 time in total.

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Toons
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Re: Does my work vehicle allowance count as taxable income?

Post by Toons » Mon Feb 23, 2015 9:31 am

"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

mptfan
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Re: Does my work vehicle allowance count as taxable income?

Post by mptfan » Mon Feb 23, 2015 10:05 am

WHL wrote:didn't expect zero replies!
I think the reason you got little or no response initially is that the answer to your question is easily found with a quick google search. Take a look at the links provided in the response from Toons. There is a fine line on this forum between asking questions that require knowledge and experience to answer, versus questions that are easily answered with minimal google searching. There are lots of very knowledgeable Bogleheads who are willing to help, but most of them don't want to be your assistant to type obvious queries into google and then spoon feed the links to you.

WHL
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Re: Does my work vehicle allowance count as taxable income?

Post by WHL » Mon Mar 02, 2015 1:48 pm

Thanks cycle, BL, and toons. I had found some similar information online prior to posting, but as everything seems to deal with depreciation and a standard mileage rate, I don't know how to calculate it.


Work from home, no office, travel exclusively.
30k miles driven for business only purposes, miles logged w/ date, purposes, customers, etc.
Company gives a 9k annual car allowance benefit
Company pays for all fuel costs.

I think that the company paying for fuel would negate my ability to claim the standard 56 cent deduction.

It's funny that you posted the intuit link. I used turbotax and didn't see this information. I decided not to claim anything on my taxes since I couldn't find enough info! I guess I will need to consult a professional, pay a hundred or so dollars, and see what I can find out.

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jfn111
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Re: Does my work vehicle allowance count as taxable income?

Post by jfn111 » Mon Mar 02, 2015 1:55 pm

This is from Turbo Tax:
If you work for an employer who requires you do some traveling using your own car, federal tax law allows you to claim a deduction for the business mileage if you’re not reimbursed for the expense. Even when you do receive a reimbursement or allowance, it’s still possible to take a deduction depending on the type of reimbursement policy used by your employer.
Calculating work-related mileage

You have two optional methods to calculate your mileage expenses when using a personal vehicle for work purposes. If you don’t mind keeping receipts for every expense, you can calculate your deduction using actual expenses, including depreciation, licenses, gas, oil, tolls, lease payments, insurance, garage rent, parking fees, registration fees, repairs, and tires. Your deduction is based on your business use percentage, i.e., your business miles as a percentage of your total miles. The second method is to multiply the miles you drive for work by the Internal Revenue Service standard mileage rate, which changes every year (and sometimes twice a year).
No reimbursement policy

When your employer doesn’t provide any mileage reimbursements, you can report the entire amount of your expenses (using either the actual expense or standard mileage method) on Schedule A with your other “job expenses and certain miscellaneous deductions.” The total of all expenses you report in this category must be reduced by two percent of your adjusted gross income, or AGI. For example, if your only miscellaneous deduction is $5,000 of mileage expenses in a year you report an AGI of $50,000, you must reduce the deduction by $1,000 ($50,000 times two percent). The detail of your expenses will be shown on either Form 2106 or 2106-EZ, which is used to report employee business expenses. (TurboTax will fill in the right forms for you.)
Accountable plan reimbursements

If your employer has a policy that covers reimbursements or allowances for mileage, you need to determine whether the policy is an accountable plan before claiming any deduction. Assuming that all mileage covered under the policy solely relates to your employer’s business, the IRS treats the policy as an accountable plan if you must account to your employer for your business automobile expenses and return any excess reimbursement within a reasonable period of time.

If these conditions are met, your employer doesn’t have to report the reimbursements as taxable wages on your W-2, which means you don’t pay income tax on them. But, since you receive tax-free mileage reimbursements, it means you’re precluded from also taking a deduction for the same mileage expenses. However, if your reimbursement or allowance doesn’t cover the entire expense, you can deduct the unreimbursed portion as if no reimbursement policy exists. Your Form 2106 will show your expenses and the amount of employer reimbursement; the difference between the two will be your deduction.
Other reimbursement policies

Your employer may reimburse you for using your car at work, but, if the payments aren’t made pursuant to an accountable plan, your employer has to include them on your W-2. As a result, the reimbursements will be reported on your tax return in the same way as your wages. Although you will pay income tax on your reimbursements, you can deduct all mileage expenses despite receiving reimbursements.

WHL
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Re: Does my work vehicle allowance count as taxable income?

Post by WHL » Mon Mar 02, 2015 2:01 pm

jfn111 wrote:This is from Turbo Tax:

Your employer may reimburse you for using your car at work, but, if the payments aren’t made pursuant to an accountable plan, your employer has to include them on your W-2. As a result, the reimbursements will be reported on your tax return in the same way as your wages. Although you will pay income tax on your reimbursements, you can deduct all mileage expenses despite receiving reimbursements.
This last paragraph sounds quite appropriate. The vehicle allowance I'm given is included in my standard W-2 salary with no distinction.

Even with the links that have been posted here and what I've read elsewhere, this is all still way over my head.

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jfn111
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Re: Does my work vehicle allowance count as taxable income?

Post by jfn111 » Mon Mar 02, 2015 5:29 pm

I think the key for an accountable vs non accountable plan is if your employer is asking for documentation for miles driven and is prepared to ask you to reimburse them for an over payment.
If your employer is just giving you $X amount and telling you good luck, and adding the amount on to your taxes, then your in a non accountable plan and should be deducting miles.
Here is an IRS Link
http://www.irsvideos.gov/TaxabilityCert ... xpense.pdf

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Re: Does my work vehicle allowance count as taxable income?

Post by LadyGeek » Mon Mar 02, 2015 9:38 pm

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