Mic1

Hi,

A company car has been suggested as part of my package as opposed to me purchasing a vehicle and claiming back expenses. Looking for tax advice more than anything at this stage.

Thanks

Guindalf

Depends on the position and what percentage will be used for work.

It is rare for company cars to be included and, as far as tax advice, every person's taxes would be affected differently depending on useage, position, income, etc., etc.

Your best bet is to consult with CPA rather than guesses from people on a forum. The best you can hope for here is another's experience which may or may not be relevant to yours!

Sammy2018

Rete

If you use your own automobile for work use and are reimbursed by the company for gas and mileage, then that amount is not tax deductible and might even be tax includable. An accountant is the one to clarify this.

I know many people who have company supplied automobiles in their positions. I never asked them, however, how it worked for them tax wise.

civilservant

When can mileage reimbursement on amounts that you have already paid (that were taxed, such as gas tax and presumably payroll taxes) ever be taxed again? If the money comes from the employee it has almost by definition been taxed at some point.

Rete

I didn't say it was taxed again. I said it cannot be used as a tax deduction if you were reimbursed by the company for the expenditure. My first husband was a salesman. He had the choice either get reimbursement for gas mileage or claim it as a deduction on his income taxes. He claimed it as a deduction on our taxes.

MtbbikeVanlife

I had a company car back in the UK. When discussions were taking place for me to move over here it was agreed that I would receive the same take home pay and benefits in the USA as I did in the UK, taking into account all taxes, health insurance etc. (and the initial pay rise for the move !). I am the only employee to have been moved to the US (I set up and am now running the operation over here) so everything was trial and error with the assistance of a US Accounting firm. Of all the things that had to be considered, it was the taxes on the car (... F150 FX4) that nearly took us to breaking point ! The truck is fully expensed, and the company threw a bit of a fit on the amount of tax i had to pay due to the amount of personal miles I was doing. As agreed, they pay the tax for me, but then end up paying tax on that tax (beyond my understanding).
All is good now - especially I am still happy with the truck after 6 years and 160,000 miles. Overall it is probably now one of the cheapest vehicles to run in the whole Company's fleet.

civilservant

It was this part that the question was about:

Giantaxe

Unless used largely for business, company cars are relatively rare here because there's no tax advantage in having one and they can be a pain in the ass accounting for on your tax return.

Guindalf

Actually, it can be beneficial when it comes to claiming tax deductions.

My company used to reimburse me at the rate of 25 cents per mile, which was enough to cover the payments on a new car (Honda Accord V6 EX-L w/Nav, replaced with a Toyota Camry Hybrid) as well as gas and insurance. I was also able to claim the difference between what I got from the company and the government rate and that amount came straight off the top of what I had to pay (wife has two jobs where tax is not deducted, so I usually end up owing the government something). When gas shot up in price, so did the government rate and, at one time, was in the region of 54 cents, so every mile I drove, I was earning 29 cents over and above what my company paid!

Giantaxe

If the company was paying for gas, it shouldn't have made any difference from a tax perspective if the price of gas increased. They should have been including the cost of gas reimbused to you on your W2, so any increase would have increased your "income" against which you could have claimed the increased mileage deduction.

Guindalf

How are you able to read what's not there? Where did I say they were paying for gas?

They gave me a MILEAGE allowance, which was less than the government allowance. I was simply able to claim the difference.

IIRC (It's been a few years), the tax form said...
How many miles did you drive for business in the past tax year?
How much were you reimbursed?

The difference between that and the government rate was then deducted straight from my total owed (or added to the refund, whichever applied).

Is that clear enough?

Giantaxe

Ok, I interpreted the "as well as gas and insurance" as referring to what your employer was paying as opposed to what their allowance was enough to cover the cost of. Thanks for clarifying.

But I still don't see how an increase in gas price makes a difference. If you were paying for gas, then your cost of gas increased. In other words, you were paying more out of your own pocket in car costs and deducting more from your income in deductible mileage rates. As you say "When gas shot up in price, so did the government rate ".

Noorah101

The rate of the government mileage reimbursement is affected by gas prices each year.

Rene