Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121096  
Subject: Re: Vehicle allowance vs. mileage reimbursement Date: 4/6/2013 8:54 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
1) do I need to track my mileage now that I'm getting vehicle allowance? My employer has not given any indication that it will want or need to know this information.

Yes, you will need to track your own mileage just as before.

2) am I correct in assuming the vehicle allowance will not have taxes withheld and that I do not need to pay taxes on that amount?

No. Allowances like this are supposed to be treated just like your wages, subject to all of the usual payroll withholdings, including federal income tax, social security tax, medicare tax, state income tax, and California SDI.

I will note that even thought this has been the tax law for over a decade, many employers do not report these allowances correctly. Some will put them on a 1099-MISC (so you end up paying ALL of the social security and medicare taxes instead of just 1/2), and some don't report them at all.

3) what, if any, are the impacts of my now being able to itemize work mileage on my tax return for 2013 and beyond?

You would report your mileage on Form 2016. The results of that flow to miscellaneous itemized deduction on schedule A, where they are subjected to a 2% of AGI reduction. If anything is left after that, you'll get a tax benefit. Unless you're subject to AMT, where these expenses are disallowed.

4) Am I missing anything else?

Even if the $250 a month covers all of your vehicle expenses, you're getting the short end of the stick, as it's still taxable income and may not leave you enough to pay the expenses after reduction for taxes. The per-mile reimbursement is more work for the employer, but much fairer to the employee.

--Peter
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement