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CPA tax question - vehicle allowance

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    CPA tax question - vehicle allowance

    Our company just sold. We have always been provided company pickups.

    Our new employer wants us to provide our own pickup and will pay us $***x a month plus pay for our gas to drive our own. We are responsible for tires, maintenance, etc.

    The allowance will not have taxes taken out as we will have to keep up with our mileage and treat it as mileage reimbursement?

    Since the $***x is not taxed will i be responsible for the taxes on that when income tax is due? Or can i use the mileage too as a write off?

    If that makes sense.

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    #2
    The vehicle allowance is the same for everybody whether we drive 50 miles or 150 miles a day. We should all drive pretty close to the same. But just an example.

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      #3
      thought it was either or. either mileage or pay for your truck not both

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        #4
        What i used to do::::

        At the end of year i would take my total business miles x .54. Then add up all of
        monthly allowances plus what they paid in gas. Subtract the 2 and hoped the mileage was more than the allowance. Then write off the rest.

        I use mileage IQ app for my tracking. Makes it super easy and the fed govt. accepts it.


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          #5
          Deduct your mileage at the IRS allowable amount. And be done with it.

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            #6
            Originally posted by Bruiser View Post
            thought it was either or. either mileage or pay for your truck not both
            It will be a vehicle allowance straight across the board. ***x amount of dollars the same each month.

            It dont matter if i drive 500 or 2000 miles a month.

            But he said we will keep up with mileage so taxes dont get taken out of my monthly allowance.

            Im assuming he will be using our mileage to his benefit. But will it benefit me too if hes using it.

            I dont know if that makes any sense. Guess ill call my cpa.

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              #7
              Originally posted by Hawkins View Post
              It will be a vehicle allowance straight across the board. ***x amount of dollars the same each month.

              It dont matter if i drive 500 or 2000 miles a month.

              But he said we will keep up with mileage so taxes dont get taken out of my monthly allowance.

              Im assuming he will be using our mileage to his benefit. But will it benefit me too if hes using it.

              I dont know if that makes any sense. Guess ill call my cpa.

              Sent from my SAMSUNG-SM-G890A using Tapatalk

              That's a great idea.

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                #8
                Have had a CPA for 35 years. My new CPA of 15 years tells me he is about done. The new Trump tax laws are a mess. Nobody understands them. He is thinking about retiring about 5 years early......

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                  #9
                  I always thought it was either pay mileage if employee provides vehicle or company provides vehicle and pays expenses, no mileage.

                  I get mileage for about 5K per month. I drive a 500K mile, 17 year old Cummins. No payment, cheap insurance,decent mileage. Mileage $$ is tax free.

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                    #10
                    I am a mostly retired CPA (still work a little during tax season). If they pay a straight allowance, it is supposed to be in your compensation as apposed to a reimbursement for actual miles driven, which would not be included in your compensation. Prior to 2018, if you received an allowance which was included in compensation, you could take the IRS standard mileage rate to offset that allowance as a miscellaneous itemized deductions if you could itemize and that amount plus other miscellaneous itemized deductions exceed 2% of your adjusted gross income. Beginning in 2018, miscellaneous itemized deductions are no longer allowed. Having said that, if your employer does not included the allowance in your compensation, I would not worry about it. It is the employers responsibility to include it and if they don't and get audited, they will be responsible for any taxes. I am sure this is as clear as the muddy Brazos. If you gave any specific questions, you can PM me.

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                      #11
                      My cpa said i will have to drive equal to or more miles than my allowance is. Example, i get 1500 a month allowance, at the mileage rate of .545 cents a mile, id have to drive 2700 something miles. I forget the math.

                      However is 2018 or 2019 the laws have changed. If im a w2 employee i cannot write of mileage if that compensation is included in my w2 wages. Our employer will have to pay us our salary W2. And 1099 us for our phone and vehicle allowance for us to use it as a write off and not have to pay taxes on it.

                      I hope i explained that right, and understood it right from her.

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