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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have received a 1099 form from my employer for a car allowance

Resolved Question:

I have received a 1099 form from my employer for a car allowance that I receive monthly. Where do I report this income on my personal taxes? And where do I deduct mileage for offseting cost that I have incurred?
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

Hello cstsoap,


Do you work for this company as a regular employee for a set wage? Do they issue you a W-2 form at the end of the year to report your earnings?



Customer: replied 7 years ago.
Yes I am a regular full time employee and recieve a w2. But the payments I receive for the car allowance are not paid through payroll they are paid from accounts payable with no taxes.
Expert:  Merlo replied 7 years ago.

Hello again cstsoap,


One more question please. What box number on the 1099 form did they report this in?



Customer: replied 7 years ago.
Actually, I am the person in accounting that will be making out the 1099 forms, does it make a difference if I enter it in box 3 other income or box 7 nonemployee compensation?
Expert:  Merlo replied 7 years ago.

Hello again cstsoap,


Thank you for the clarification, and I am glad to came here for your answer, because you cannot report this on a 1099 form. The amount that you paid to this employee for a car allowance MUST be included in his taxable wages that are reported on his W-2 form. It does not matter that you paid him with a separate check from payroll.


When you pay an employee for business expenses under a non-accountable plan, those expenses are included as part of his taxable wages. The company must pay their share of SS and Medicare taxes on those wages and also withhhold those taxes from the employee.


Please refer to page 3 of the following instructions for the 1099 form under the section entitled "Employee Business Expense Reimbursements".


You will need to have your payroll department add these payments to his taxable wages for the year and report them on his W-2 form.


If this was helpful please press the Accept button. Positive feedback is also appreciated.


Thank you cstsoap



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