Topic Thread

Car Allowance

  • 1.  Car Allowance

    Posted 05-22-2018 16:24



    I am interested in knowing how much companies pay in car allowances to VPs and PMs?  Also, what does the car allowance cover (is gas included or separate expense? Insurance? Repairs? EZPass?) and how is it paid (taxable through payroll? Separate check and 1099?)



    Nicole Lindstrom

    Nicole Lindstrom, CPA


    Tore Electric Company, Inc.

    <a href=image001.jpg@01D270A7.EFE9C510">

    Hamilton Business Park
    85 Franklin Rd. – Units 4A & 5A

    Victory Gardens-Dover, NJ 07801
    (973) 659-3401 – Phone


  • 2.  RE: Car Allowance

    Posted 05-23-2018 10:11
    ​Good morning Nicole!

    We are moving away from car allowances here but still have 3 of our PM's and one Operations Manager with an allowance. Our amount is $1,000 a month and is just the allowance. It is the employee responsibility to keep up with the maintenance, gas, etc. Once these three have paid off their personal vehicles, they will be required to drive a company truck. Also - we run the allowance once a month through a payroll increase and it is taxable income.

    Krystal Amos
    Miles Resources, LLC
    Puyallup WA

  • 3.  RE: Car Allowance

    Posted 06-07-2018 09:16
    I am also interested in seeing what others are doing in regard to vehicle allowances.

    Sean Swearman CPA
    Chief Financial Officer
    Kogok Corporation
    Upper Marlboro MD
    (301) 736-5300

  • 4.  RE: Car Allowance

    Posted 06-13-2018 11:32
    ​We have 3 PMs on auto allowance. Our rate is $750.00. We mostly set up our PMs with company owned vehicles. We do the auto allowance but it is not preferred.

    Stephen Hadley
    Quigg Brothers, Inc.
    Aberdeen WA
    (360) 533-1530

  • 5.  RE: Car Allowance

    Posted 06-14-2018 06:46
    Auto allowance generally goes on a 1099 as additional taxable compensation unless employees submit a mileage log each month. It would cover maintenance and repairs normal wear of the vehicle as well as gas. Gas however can be reimbursed separately as a business expense as well as the ez toll charges and they do not go on the 1099. You could process the allowances against the mileage logs and should be fine. Many companies do not do mileage logs but are exposing themselves. You could check the IRS annual rate for mileage reimbursement and guidelines. Amount varies based on your internal calculation of how much travel will be involved. Executives usually get a higher rate. I have seen 350 to 1500 the lowest usually for project engineers. Highest for estimators and executives.

    Angel Goldman CCIFP, MBA
    Bartlett Brainard Eacott
    Bloomfield CT
    (860) 922-5009

  • 6.  RE: Car Allowance

    Posted 06-14-2018 09:06
    We pay our executives and PM's a car allowance in lieu of  providing a company vehicle.  This is processed via payroll and is included in their W-2 wages.  They is no further allowance for gas, maintenance, etc. unless they are required to drive above and beyond the normal project distances.  Here's the pay scale:

    PM's & Executives:  $800/mo.
    Superintendents:  $600/mo.
    Asst. Superintendents:  $400/mo.

    Amy McKelvey
    Carocon Corp.
    Charlotte NC
    (704) 525-1410

  • 7.  RE: Car Allowance

    Posted 06-14-2018 09:48
    Well, we must be overpaying our auto allowance.  We pay $1000/month for PM's, Estimators, and Executives. We pay $500/month to project coordinators and assistant PM's.  The allowance covers insurance, repairs, gas, everything.  It's a non-accountable allowance so it's taxable income to them.

    Christine Kettelkamp CPA, CMA, CCIFP
    Jenco Inc.
    Scottsdale AZ
    (480) 513-1601

  • 8.  RE: Car Allowance

    Posted 06-14-2018 11:30
    I've experienced a spectrum over the years, but as with others who have already posted, it depends on the employees position.  I've had them anywhere from $300 - $800.  When it has been my decision, I have always made it taxable income, especially in lieu of mileage logs....which let's be honest, requires paperwork which isn't a lot of my field employees favorite thing to do.

    That said, I try to steer away from them, because the expectation is that the allowance covers maintenance, insurance, etc., with the exception of fuel.  But I have some employees who cannot manage their finances, and they use the money for other things, and then they can't afford to maintain their vehicles.  I prefer to put them in company vehicles.

    Chalyce Wilde
    QFP, Inc.
    Woods Cross UT
    (801) 292-3408

  • 9.  RE: Car Allowance

    Posted 06-15-2018 08:04
    ​IRS really frowns on employees receiving 1099s in addition to W-2s, for some reason.  They generally insist that, if a person qualifies as an employee, all their comp be reported on the W-2.
    If you have been paying car allowances to employees, who have been claiming employee business expense deductions in the past for the percentage of their vehicle expense related to business, those employees will not be able to claim such employee business expense beginning in 2018 under the Tax Cuts and Jobs Act of 2017.  This may be an incentive to move to an accountable plan, under which the employees are only reimbursed for business expenses for which they account to their employer.

    Daniel Lacey
    Clark Schaefer Hackett
    Columbus OH
    (614) 885-2208