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Does anyone receive a company car allowance? I'm trying to determine what a fair number would be (for both the employee and the employer).

The only example that I know was an allowance of $1100/month and that is supposed to cover gas, maintenance, insurance, car payment, etc.. This person drove @ 100 work miles per day (@ 2200 miles per month for work). This was for Georgia.

Any points of reference would be very helpful.

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50 cents a mile sounds fair to me.

Does the employer require you purchase a car in your name, and they reimburse you? If so, run away. If you lose your job, you're stuck with no income plus a car you wouldn't have otherwise purchased.

Getting the government allowed $.50 per mile is very reasonable.

Most allowances I hear from people I work around are $600-$700/month + gas reimbursement on top of that. This is from many different companies. They have to send receipts in for gas and then are reimbursed.

RedCelicaGT said: Does the employer require you purchase a car in your name, and they reimburse you? If so, run away. If you lose your job, you're stuck with no income plus a car you wouldn't have otherwise purchased.

No this would be for a car you already own. Most people in this area already own one or two cars per family.

Cash car allowance is taxed as income.

Best bet is to use POV and expense actual miles (tax free).

slappycakes said: RedCelicaGT said: Does the employer require you purchase a car in your name, and they reimburse you? If so, run away. If you lose your job, you're stuck with no income plus a car you wouldn't have otherwise purchased.

No this would be for a car you already own. Most people in this area already own one or two cars per family.


I've heard of employers requiring a car under x years old or of a certain type (sales positions). This may lead some to go out and buy a car, even if they already had one.

As a point of reference, the company I work for provides service reps with a car, insurance, a charge card for gas and maintance, and personal use up to 50% of the amount used for business.

so how do those fancy folks at them banks get their free mercedes leases without taxable income? What is the trick.

rigor said: so how do those fancy folks at them banks get their free mercedes leases without taxable income? What is the trick.
The lease is in the company's name and the car is used for business then it is not taxable income, just a business expense.

I've been in this situation before and had both sceniros, here is what I have learned:

Goal = Have your car cost covered by your company (assuming a w2 employee).

Bad:
- Accept a cash car allowance (taxable income).

Good:
- Company owned vechicle given to you with insurance (Grey area is you are only suppose to use it for business and the other use is taxable)
- Company leased vechicle given to you with insurance (Grey area is you are only suppose to use it for business and the other use is taxable)
- Personally Owned Vehicle (POV) and take the $.51/mile for actual business miles (non-taxable)

quaters said: rigor said: so how do those fancy folks at them banks get their free mercedes leases without taxable income? What is the trick.
The lease is in the company's name and the car is used for business then it is not taxable income, just a business expense.

I've been in this situation before and had both sceniros, here is what I have learned:

Goal = Have your car cost covered by your company (assuming a w2 employee).

Bad:
- Accept a cash car allowance (taxable income).

Good:
- Company owned vechicle given to you with insurance (Grey area is you are only suppose to use it for business and the other use is taxable)
- Company leased vechicle given to you with insurance (Grey area is you are only suppose to use it for business and the other use is taxable)
- Personally Owned Vehicle (POV) and take the $.51/mile for actual business miles (non-taxable)


If you get a car allowance (taxable) you can still deduct the difference of .51 per mile and what was paid to you from that car allowance on your taxes from what I understand. Anyone else have input on this?

Mileage paid is best if you drive a lot.

Car allowance is better if you drive very little

Downside to having a company car is if you leave or are let go you have no car (assuming you only have the company car as your car)

mikef07 said: quaters said: rigor said: so how do those fancy folks at them banks get their free mercedes leases without taxable income? What is the trick.
The lease is in the company's name and the car is used for business then it is not taxable income, just a business expense.

I've been in this situation before and had both sceniros, here is what I have learned:

Goal = Have your car cost covered by your company (assuming a w2 employee).

Bad:
- Accept a cash car allowance (taxable income).

Good:
- Company owned vechicle given to you with insurance (Grey area is you are only suppose to use it for business and the other use is taxable)
- Company leased vechicle given to you with insurance (Grey area is you are only suppose to use it for business and the other use is taxable)
- Personally Owned Vehicle (POV) and take the $.51/mile for actual business miles (non-taxable)


If you get a car allowance (taxable) you can still deduct the difference of .51 per mile and what was paid to you from that car allowance on your taxes from what I understand. Anyone else have input on this? ...

Can only deduct if it is over 2% of your AGI.

http://www.irs.gov/publications/p463/ch01.html#d0e396

So if you made $100,000 a year then you could deduct if the amount was over $2000 (4000 miles per year) or if you made $200,000 then it would have to be over $4000 (8000 miles per year).


So pretty much everyone getting a car allowance or mileage. You would rarely (if ever) see a company reimbursing for car if you were only doing 4000-8000 miles per year.

Thanks for the link

mikef07 said: You would rarely (if ever) see a company reimbursing for car if you were only doing 4000-8000 miles per year.
Thanks for the link

That is actually the situation I've been in. It isn't the we are reimbursing you for "all the milage", it's just considered a "perk". I've had a company car for a <1 mile commute and had a car allowance for a 4 mile commute.

quaters said: mikef07 said: You would rarely (if ever) see a company reimbursing for car if you were only doing 4000-8000 miles per year.
Thanks for the link

That is actually the situation I've been in. It isn't the we are reimbursing you for "all the milage", it's just considered a "perk". I've had a company car for a <1 mile commute and had a car allowance for a 4 mile commute.


All depends on your circumstances. For you a car allowance of $500/month would benefit you way more than any mileage reimbursement would. If you drive further distances then car allowance is fine, although mileage reimbursement would be preferable, since you would be able to deduct the difference from what they pay you and the deductible mileage rate.

The point was a poster above said car allowance=bad. Not necessarily. Depends on circumstances. Car allowance can be great if you drive short distances. It is not necessarily bad if you do drive long distances snce you can deduct the mileage reimbursement minus the amount paid out to you.

Company car is good if you don't have your own car, but bad if you have a car that you are paying for already.

I have had a car allowance, a company provided lease car, several years in Rental cars and POV with mileage.

The best was the rental car, I turned them in every 30 days and it was fully paid for by my company with no tax consequeces for me. (I was 100% travel, and did 3-4 months per location on average before being moved) I also had a lot of hotel and airline miles during this period.

Next best was a company that paid me the $0.55/mile that the government allowed on my POV. In this case I did not get a lump sum payment, they just paid milage. My car (diesel) at the time did 45+ MPG.

Next choice was the flat car allowance, I basically drove from my apartment to either the office or the airport to fly out. (I had a parking account that was direct billed to my company at the airport) It was basically just a small taxable salary increase they paid "travellers."

Next option is company provided leased/owned car, the company assigns a valuation to the comparable value including insurance and you have to determine what percentage usage is business and what is not. (and Commute is personal and as such unless you park it at the office you get some taxation.) My company "charged" a small amount of witholding to offset the personal usage. They also specifically allowed personal use including gas, within reason.

---

The unmentioned option is when your conract rate includes your providing a car and sucking up the costs. You then write the full amount of expense/gas (adjusted for personal use) or milage (business only) off your tax returns. These jobs either pay REALLY well or REALLY crap. Mine have mostly been the former, thankfully.

Thanks for the responses. Here is another one from a Fortune 500 company who recently changed their company car policy to this:

1. Personally owned vehicle that must be in good shape (they define that later on, but it's reasonable for a car that will have customers in it), less than 4 years old, and has 4 doors.

2. The company will pay $800/month (taxable) and reimburse @ 13 cents/mile driven for business use. The employee is responsible for everything else.

Looks like the "good old days" where a company just gave you a set of keys and a gas card are gone.

Company I work for has 2 options, $600/month allowance and .51/mile reimbursement, must be newer than 4 years, 4 door, all that good stuff. Other option is they provide a new leased vehicle every 3 years or 75k miles which ever is first. Have a dollar amount of what the vehicle can be up to but must be a 4 door, and automatic.

I much prefer the company leased vehicle as #1 it's non taxed, #2 they provide insurance there by allowing me to lower my private auto insurance (which goes up quite a bit when you drive 25-30k + miles per year), #3 I get to try out a new car every 3 years (but normally sooner as I hit that 75k miles in under 3), #4 can buy the car afterwards for a pretty decent price, #5 don't have to worry about the maintenance as it's all paid for by the company, #6 don't have to put tons of wear and tear on my own personal vehicle. There's probably a few more, but I feel that it's a much better deal with the company leased car than the allowance, but then I said that already.

slappycakes said: Thanks for the responses. Here is another one from a Fortune 500 company who recently changed their company car policy to this:

1. Personally owned vehicle that must be in good shape (they define that later on, but it's reasonable for a car that will have customers in it), less than 4 years old, and has 4 doors.

2. The company will pay $800/month (taxable) and reimburse @ 13 cents/mile driven for business use. The employee is responsible for everything else.

Looks like the "good old days" where a company just gave you a set of keys and a gas card are gone.


It depends on the company, always has. If your job truly requires a lot of "wheel" time you are more likely to see a company car. Many companies don't provide vehicles for ANYone, even executives. Usually if you are getting an allowance you aren't travelling that much.

If you are only getting $.13 cents a mile that is what is considered "gas only" -- if at the end of the year your re-imbursed milage can be claimed at the difference between the $.13 cents and the current full federal rate. (the $0.13/mi is already paid non-taxable) As far as the IRS is concerned the $800/mo is part of your salary and not part of your car writeoff calculation -- if its being paid taxable. (you can also track your actual costs and personal/business usage but very few people do this)

If you drive enough you may get the company to pay you the full rate non-taxable and no allowance -- which is nice unless you quit travelling for a while.



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