Car allowance payment versus company lease car?

Does your company provide a car allowance or a lease car or both?
If a car allowance payment is made, what type of recordkeeping is required from your employees to substantiate the business use of the car? Is it an accountable plan or non-accountable plan (per IRS Publication 15)?


  • 3 Comments sorted by Votes Date Added
  • I strongly suggest discussing this with your corporate tax accountant....the recordkeeping must be done in a certain fashion.  And there are rules that come into play when the employee is allowed to use the car for personal usage.  I would read through not only Pub 15, but Publication 15B.

     We don't do car allowances, but provide company-owned cars.  Some employees choose the "restricted use" -- i.e. personal driving ONLY back and forth to work. Others choose "unrestricted use". In both cases, you need to track how much of the total mileage was used for business vs personal. We use the employee's mileage reimbursement miles for usage.  The tax calculation is NOT fun but I do it using a spreadsheet provided by our external tax accountant.  Actually I am working on 2008's taxability right now since it goes in the last paycheck for 2008.  The year we use is Dec1 to Nov 30 so as to get it into the last check in December.

  • Does anyone currently have a Car Allowance policy they would mind sharing with me?  I have looked high and low and can't locate one.
  • You may want to try an agent.  The company we may be signing with is called Runzheimer.  There doesn't seem to be other competitors (there is one, however, they used to work for Runzheimer so their product is very similiar).  They set up a program for your salespeople that works with IRS laws to make it a tax-free benefit for your employees.  It also makes it a fair and equitable program for your employees as it bases the auto allowance amounts on many variables including geographical location of the employee and depreciation of their particular car/year of car.
Sign In or Register to comment.