How do I get it so that my car allowance is not taxed.
2007-12-27 02:58:36 · 5 answers · asked by janeen t 1 in Business & Finance ➔ Taxes ➔ Other - Taxes
Yes, if they are providing a car, it's taxable. I don't know why your previous company didn't show it as taxable - maybe they just messed up.
If you have business miles that you drive the car, those are deductible expenses. Personal or commuting miles are not.
2007-12-27 03:36:56 · answer #1 · answered by Judy 7 · 0⤊ 1⤋
Anything you receive from any company counts as income, whether it be an allowance for car usage, a big win in a casino, or even that toaster you get for opening up a bank account. By the way, this is the reason banks stopped giving these away -- people were annoyed at having to report it on their tax returns.
Your company has the right to report any expenditures to the IRS that they are able to in order to lower their taxable income. Instead of being annoyed by the tax you pay on this, you really should be grateful your company is even giving you a car allowance -- I have do everything out of my own pocket.
2007-12-27 03:08:06 · answer #2 · answered by darkridr 6 · 1⤊ 1⤋
You can't avoid not having it taxed. Your former employer should have reported this as income but didn't. Quite honestly, if they (and you) were audited you could wind up with a tax bill.
Personal use of a company assets are considered a form of compensation. If classified as an employee, your employer should be adding the amount to your W-2 for the year and withholding/charging the appropriate taxes.
2007-12-27 03:42:54 · answer #3 · answered by Molly 6 · 0⤊ 1⤋
Assuming that yor former employer reimbursed you for auto expenses you reported to them each month you would not have income. This is a reportable plan.
Assuming that your current employer is just giving you a fixed amount each month you will have that added to your W-2 and you would have to itemize deductions to get a tax deduction. This is a non-reportable plan.
Obviously the first plan is better from a tax point of view. Your current employer would have to change how they pay these expenses to you.
2007-12-27 04:02:29 · answer #4 · answered by waggy_33 6 · 0⤊ 0⤋
It is income, so it has to be taxed.
2007-12-27 03:07:49 · answer #5 · answered by mvpwarner13 4 · 2⤊ 1⤋