Originally Posted by taxableme
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?
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 you 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 exceeds your actual vehicle expenses, then you must be required to return to your ER any excess of reimbursements over substantiated expenses within a reasonable period of time.If not, you must report the difference on your return as income;however, your ER can pay the you a higher rate if he wishes, so long as the rate is reasonably designed not to exceed the your actual or anticipated vehicle expenses. In this case, you do not need to report it on your return as your income because it is your ER’s reimbursement. Clearly, reimbursing under an accountable plan is better for both your ER and you, an EE.