General Inquiries

Additional Personal Vehicle Allowance

  • 1.  Additional Personal Vehicle Allowance

    Posted 18 days ago
    We currently pay $7,200 year for a vehicle allowance, which we tax because we do not require our employees to turn in mileage.  We have an employee the drives a lot of business miles as required for his job as safety director.  Last year he drove 22,765 business miles.  He would like to be compensated for the high miles he drove.  His thought is that our allowance covers 13,200 ($7200/.545) so he should be compensated for an additional 9,565 miles (22,765-13,200).  He would like compensated at .27/mile for $2,582.55.  Our president doesn't have a problem with this, but our question is can we pay this in 2019 without taking out taxes?  He has really good documentation to show his business miles.  We also paid $6,346 for his fuel in 2018.

    Thank you for your help,

    ------------------------------
    Scott Wallace
    Otto Baum Company, Inc.
    Morton IL
    (309) 266-7114
    ------------------------------


  • 2.  RE: Additional Personal Vehicle Allowance

    Posted 17 days ago
    In order to be able to reimburse an employee for business mileage in a manner that allows a deduction to the employer and no taxable income to the employee, you must be operating under an "accountable plan".  An accountable plan is a plan (needs to be a written plan for IRS to review) that documents that employees will account for their business miles to the employer and the employer will reimburse them for those business miles at a mileage rate not in excess of the federal approved mileage rate.  I haven't researched this, but I doubt that such a plan would be allowed to discriminate (treat certain business use or certain employees different than other miles or employees).  So I don't think you could treat this one employee differently for a portion of his miles.

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



  • 3.  RE: Additional Personal Vehicle Allowance

    Posted 17 days ago

    As long as he has documentation then it is an accountable plan and not taxable to him. Rather it is a reimbursed exepnse

     

    Bill Kearns

    Cullen, Murphy, & Co. P.C.

    1506 Providence Highway, Suite 31

    Norwood, MA 02062

    Office: 781-769-6262 Ex. 17 

    Cell: 781-956-1107

    Fax: 781-769-5675

     

     

     

    Disclosure and Statement of Confidentiality

    The contents of this e-mail message and its attachments are intended solely for the addressee(s) hereof. In addition, this e-mail transmission may be confidential and it may be subject to privilege protecting communications. If you are not the named addressee, or if this message has been addressed to you in error, you are directed not to, disclose, reproduce, distribute, disseminate or otherwise use this transmission. If you have received this transmission in error, please alert the sender by reply e-mail; we also request that you immediately delete this message and its attachments, if any. Cullen, Murphy and Co., P.C. and its related entities reserve the right to monitor all e-mail communications through their networks.

     






  • 4.  RE: Additional Personal Vehicle Allowance

    Posted 7 days ago
    To be an accountable plan, the fuel that you paid for must also be included in the equation. I am not aware that you can pay for an employee's fuel tax-free without accountability. It sounds to me like you should be putting that on his W-2 under your current non-accountable plan in addition to the flat allowance.

    If you buy fuel for other employees without a full accounting, those amounts should also go on W-2s. I think this is a common mistake. Employers provide a company-paid gas card, and then charge off the fuel purchases without ever accounting for them.

    ------------------------------
    Cynthia Lee
    CFO
    Haydon Building Corp
    Phoenix AZ
    (602) 296-1496
    ------------------------------