Employer Truck Allowance/Mortgage Question

[175gr7.62]

My oldest son called me last night with a question and I am hoping one of you have an answer.

He has been asked to take a new position (promotion) at his company and he is pretty excited about it. One of the requirements though is that he has to drive a newer 4 door pickup that they don't provide. They do provide an allowance of $1000/month for the vehicle/insurance, and he would be reimbursed for fuel, tires, maintenance.

The kicker is, he and his wife are in early stages of trying to buy a house and and he is worried that if he accepts the position and buys the truck it will mess up his debt-to-income ratio for the mortgage approval process since it is still a debt, even though he will receive an allowance for it.

I didn't think to ask him, but wouldn't that also be taxable income?

Any mortgage guys know the answer to this?

[ramrod]

Truck allowance is non-taxable.

[tfrye]

I am no Mortgage expert but I would think some sort of written explanation from the employer or proof of payment would be fine?

[67olds442]

They will pick apart his expenses, and he should be able to get proof from the employer to prove they are paying it.

[UncleBubba]

Just went through this. I bought/financed my truck personally for our shop, wanted it in my name just in case something happened. Our shop makes the payment. I had to prove this with a bank statement from my bank and they called the shop to speak with my dad and he verified that the info was correct. I was surprised they didn't want more proof but it was pretty easy. May be a little more difficult with a larger company though.

[txoutdoorsman24]

Truck allowance is non-taxable.

Negative ghost rider. Mine is dam sure taxed every month!!!

[BrianL]

There could be a timing issue/problem in the very short term, but over a period where he can show reimbursement he will be fine.

[175gr7.62]

Negative ghost rider. Mine is dam sure taxed every month!!!

That is what I am reading also. Makes it not look so good. Having him call my CPA.

[TexasBob]

Proof will need to come in that last 30-45 days after they find a house and need full approval. Early stages pre-approval is not the same. I would wait to buy a house before I turn down a promotion, but I doubt it will be an issue unless the house is at the very top of what they could be approved for.

[Mitchell8]

Not a bad deal if he finds a nice truck under $700 payment

[Easttxbowman]

Yep mine is taxed as well. That's a healthy allowance though. My advice is buy the lowest package truck that covers all requirements and stack the remaining on the note.

My biggest question and would likely deter me from a position that required it, but what is the vehicle replacement requirements? Thankfully I don't have to have a new one every few years or 100k miles, just be reliable and presentable.I don't know how anyone isn't in the hole when that's part of the deal.

[bowfishin fool]

Negative ghost rider. Mine is dam sure taxed every month!!!

We just did a whole shake down on truck allowance versus mileage.

Allowance is 100% taxable!


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[175gr7.62]

Yep mine is taxed as well. That's a healthy allowance though. My advice is buy the lowest package truck that covers all requirements and stack the remaining on the note.

My biggest question and would likely deter me from a position that required it, but what is the vehicle replacement requirements? Thankfully I don't have to have a new one every few years or 100k miles, just be reliable and presentable.I don't know how anyone isn't in the hole when that's part of the deal.

I believe it has to be 3 years old or newer.

[Daddy D]

Yes, allowances are definitely taxable.

[Burnadell]

Clint, the truck allowance payment will be added to his taxable income so that should be calculated into the debt/income ratio. If that $1000/mo does not yet show up on his paystubs, his employer can provide a letter stating that he will be receiving it.