Monthly auto allowance is not limited by the IRS. If paid under non-accountable plan - means you are not required to report your actual expenses - such allowance is considered your compensation and should be reported as such - either on W2 or 1099-misc whatever you receive.
In this case - you may deduct your qualified travel expenses on your individual tax return - either actual expenses or based on mileage rate. Please see more e details in the IRS publication 463 - http://www.irs.gov/pub/irs-pdf/p463.pdf
It doesn't matter if you have two vehicles and if your employer requires you to have a vehicle. There is no limit on business expenses deductions (such as "allows an 80% write off") .
Please let me know if any clarification needed.
The IRS doesn't regulate how the company compensate your work - that is between you and your employer. As long as you are paid at least minimum wage - there is nothing in the law that may enforce your employer to pay you more.
The issue that the IRS will look - if you are obligated to report back to your employer how you spend car allowances and if you spend them on business related travel.
If you are obligated to report - that means your employer has accountable reimbursement plan and the amount of allowances you received is not included into your income reportable on the W2 form.
If you are not obligated to report back to your employer how the amount of allowances are used - that means your employer has non-accountable reimbursement plan and the amount of allowances you received SHOULD be included into your income reportable on the W2 form as wages. In this case - that is your responsibility to deduct your expenses on your individual tax return.
If that is your car - not the car provided by your employer - you may use it partly for business and partly for personal - there is no any restriction this matter. It doesn't matter if you have two or more cars.
To claim travel expenses deductions - you should have a daily record how many miles you travel for business. Generally you may use mileage rate to calculate your deductions by multiply at $48.5 for 2007. If your employer reimbursed you less than that amount - you may deduct the rest on your tax return.
To determine whether you are traveling away from home, you must first determine the location of your tax home. Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home.
If you do not have a regular place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home.
You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses.
The only situation you may be able to deduct such expenses if you have a home as a regular place of business and you are deducting a business use of your home expenses on the tax return.
Unfortunately in case of audit - the IRS would disallow such deduction.
Travel from home to your work place is always considered a commuting travel and not deductible. Please see IRS explanation here
The only situation when such travel may be considered job related - if you maintain a work location at home and deduct home-office expenses. If so travel from your home to your job location is considered as travel between one job location to another job location and therefore will be deductible.