The Tax Questions Blog

Posts Tagged ‘non taxable mileage allowance’

Question: As the owner of a company I reimburse employees for fuel on a daily basis, can I claim this as non taxable?

My employees do not fill out mileage logs, I do not want to tax them on their per diem gas reimbursement since they pay tax at the gas pump. Is there a way to do this without having them fill out a gas/mileage log?

Answer: Unless you are running an accountable expense reimbursement plan, any reimbursements you make to your employees MUST be included in their gross wages on their Form W-2. It's then up to them to claim the expenses using Form 2106 and taking an itemized deduction for any out of pocket expense. (For most employees this will mean that they won't get any deduction since the majority of taxpayers don't have enough expenses to itemize in the first place.)

If you are running an accountable plan you are restricted to reimbursements for allowable business expenses and the reimbursements must be fully documented. That includes mileage logs for their personal vehicles, and you may only reimburse them for business miles driven, not commuting. You should base your reimbursement on the number of miles driven, not a reimbursement for fuel. Your record keeping requirements will be somewhat reduced if you use the Federal reimbursement rate, currently 55¢ per mile.

In order for them to take a deduction for the use of their vehicle, they're going to have to keep mileage logs anyway so you might as well make it easy on them and reimburse the Federal rate and require them to turn in the logs monthly. That way you don't add the money to their W-2s, their tax prep job is much simpler, and if they don't keep proper records, they get no reimbursement from you.

Not sure what you mean by "they pay tax at the gas pump" since the fuel taxes have nothing to do with income taxes.

DeWitt-Bath News in brief

• RESA Early On and TA, 13109 Schavey Road, Suite 4, DeWitt. • Redeemer United Methodist Church, 13980 Schavey Road, DeWitt. • RAVE officers, 109 N. Spring St., St. Johns.

Question: Are mileage allowances paid as an employee taxable at tax return time?

I am an employee and have for the last year been recieving a car allowance (cents per km method). No tax has been withheld, do I need to pay tax on this when filing my Tax Return. i.e Will it be added on to my Gross Income?

Answer: I'm giving you an Australian answer.
On your PAYG payment summary this amount will show up under allowances. You need to include it in your income at Allowances, etc at Item 2 (below Salary and Wages). If you don't then the ATO will data match with the info from your employer and amend your assessment and charge you tax on the shortfall. However, you can claim a deduction under Motor Vehicle Expenses using the set rate method or one of the other methods (e.g. logbook method, if you've done a 12 week logbook). The deduction you claim (to the extent that you are entitled) could effectively cancel out the income. See here for claiming car expenses in your return:

http://www.ato.gov.au/individuals/content.asp?doc=/content/16377.htm

Legislator pay 72 percent more than in 2006

By Dana Beyerle Montgomery Bureau MONTGOMERY — More House and Senate members refused a small but automatic pay raise last year as the 2010 election neared, but most still make more than $52,000 a year thanks to a controversial pay increase in 2007.

Question: When is 'car allowance' taxable and when is it not?

Is it true that when you are being paid a monthly car allowance, it is considered income and it's taxable. But when you get paid the actual mileage driven that you don't have to claim it as it is not taxable?

Answer: Unaccoutable monthly car allowance is taxable

Accountable monthly car allowace per miles driven is not taxable, IF the mileage rate is reasonable. A reasonable mileage rate is about 50 cents/km, and if you are given 90cents/km, the excess 40cents/km is taxable to you

Assessment forms in the mail Monday

Polk County tax assessment lists will be mailed Monday, Jan. 4, and property owners in the county should receive them Tuesday or Wednesday, Assessor Carolyn Page said. By March 1, all owners of personal property must return the form listing all taxable personal property that was owned Jan. 1.