My employer has offered the following arrangement. I'm not
sure I understand this, or agree with it. Please offer any advice or opinion. I
will provide a vehicle for use at work. In exchange I am to receive a monthly
check that is not taxed in any way. It is described loosely as "vehicle
reimbursement" although I do not submit any receipts or expenses. It has
been suggested that all I need to do is keep track of mileage and declare this
on my individual taxes (I assume mileage x $.565) as a deduction. I assume I
would need to declare the payment as income.
Does this sound reasonable?
Answer :
It is reasonable. Why??? I guess your ER uses accountable
plan since from your ER, you are to receive a monthly check that is not taxed
in any way (not reported on your W2). So, you, as an EE, may be using your own
vehicle for your ER’s business needs. Of course, you may be able to deduct
these expenses as miscellaneous itemized deductions on Sch A as long as you
itemize your deductions on your own tax return (if you do not itemize your
deductions, then you can’t deduct it on your return) ONLY if your ER doesn’t
reimburse you or your ER ‘s reimbursement is less than your expenses. Many ERs
choose to reimburse the EEs who do substantial amounts of business driving in
their own vehicles. As long as your ER reimburses you, then, you can’t deduct
these expenses as Misc itemized deductions on Sch A UNLESS your ER’s
reimbursement is LESS than your vehicle expenses. On the contrary, if your ER’s
reimbursement..Read More…
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