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Old 01-31-2017, 03:48 PM
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Business Use of Car Allowance

Hello, I have a unique situation that 2 different tax professionals I have used in the past have handled differently and I'm befuddled as to what is correct. Here is the situation:

Husband uses a personal car for business and personal use.
He receives $500/mo "car allowance" from his company.
His gas/maintenance/repairs are paid for by a company credit card.
At year end, he reports to the company how many of his miles were for business use (for a number, let's say 10,000 mi for 2016).
They then issue us a "Summary of Reported Business Use of Car Allowance" report showing that 10,000 miles x .54 per mile = $5,400. They then show that the total costs they incurred (which include the $500/mo + any gas/maintenance/repair costs) totaled $8,000 for the company. They subtract the $5,400 from $8,000 resulting in "additional W-2 income (that's what they're calling it...) of $2,600. They then add that in to his W-2 and tax him at year end for OASDI and Medicare taxes. There have been times when he doesn't even get a paycheck at end of Dec. because they have deducted so much in taxes from this resulting "add'l W-2 income".
My question is, can any of this be written off? My last tax preparer said I was to write off the "add'l W-2" income but that just doesn't seem right. Any suggestions?



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