Car Allowance?

jerzal

We used to lease 2 company cars for two employees. one of the leases ran out this week and the car was returned. The co. president has given his remaining leased car to the employee without a car and has bought his own personal car. However he wants me to set up a car allowance for him.
I searched all over irs.gov for rules regarding this but I can't find any. Are there rules regarding what amount you can pay an employee for a car allowance? i thought maybe there was a certain % allowed or something.

We are in PA.

Thank you for any help you can provide.

Jenn

marc

Lots of ways to look at this from a standpoint of trying to determine the monthly allowance. Keep in mind that for IRS purposes, the whole thing is probably taxable as wages. That is one of the reasons companies own and lease cars. Then you only have to allow a small percentage for personal use and run that through the w-2 as taxable wages. Speak to your tax accountant for more ways to look at this.

KAMINSKI

Get IRS publication #463 Travel, Entertainment, Gift and Car Expenses should be under forms and publications.