How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Tax.appeal.168 Your Own Question
Tax.appeal.168
Tax.appeal.168, Accountant
Category: Finance
Satisfied Customers: 3444
Experience:  Tax Accountant
58285678
Type Your Finance Question Here...
Tax.appeal.168 is online now
A new question is answered every 9 seconds

Can an employee be paid an car allowance that is not subject

Customer Question

Can an employee be paid an car allowance that is not subject to withholding tax?
Submitted: 1 year ago.
Category: Finance
Expert:  Tax.appeal.168 replied 1 year ago.
Q: Can an employee be paid an car allowance that is not subject to withholding tax? A: No, not if it is considered a car allowance. SEE BELOW: If you receive a standard car allowance from your employer, then it is generally considered to be taxable income. Conversely, monies received from a mileage reimbursement plan are generally not considered to be taxable unless the amount reimbursed is higher than the standard federal rate for mileage deductions. If the rate paid to you by the company is higher than the federal rate, then only the amount up to the allow federal limit is considered to be nontaxable.However, even if you receive a standard car allowance from your employer, you can still deduct the standard federal rate for any miles that were driven for work related purposes. At present, the federal rate for a mileage deduction is $.55 per mile. REFERENCE SOURCE:http://www.carsdirect.com/car-pricing/should-car-tax-allowance-be-claimed-as-income-or-reimbursement You can also refer to the IRS Pub 463 for more information regarding this matter. http://www.irs.gov/publications/p463/ch06.html#en_US_2014_publink100034163 Let me know if you require further assistance with this matter.