With my employer, I get an auto allowance of $600 per month to use my personal vehicle for work purposes.
Is this taxable?
My wife recently noticed that my hours worked vs my bring home pay did not add up, so I started investigating.....
When my auto allowance is added into my paycheck once a month, it appears that every deduction from my paycheck (federal, state, SS, etc.), is doubled vs what it is on a normal paycheck.
Is this correct?
I have no knowledge with taxes, and I just want to make sure that I'm not getting the shaft.
Any help would be insanely appreciated!
Sun Apr 08, 2012 12:48 am
coaster Senior Advisor
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Your auto allowance is compensation; certain of your auto expenses incurred while using your vehicle for work are tax deductible.
I don't know what's with your paycheck deductions; I don't understand your description.
However, this sounds like an excellent opportunity and incentive to educate yourself on your tax situation, so that you don't end up paying more tax than you're legally obligated to. I doubt your employer is shafting you, but you'll be shafting yourself if you get taxed on compensation for which you can partially offset through deductions.
~Tim~
Mon Apr 09, 2012 7:07 am
fast Senior Member
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quote:Originally posted by coaster I don't understand your description.
His gross income per month is $600 higher because of his car allowance. If he wasn't taxed on that additional income, his net income per month would be $600 higher as well; however, we know that the additional income is being taxed because although his gross income increases once a month by $600, his net income doesn't increase by that amount. Bottom line: they're taking taxes out of that additional income that he is referring to as a car allowance and you are referring to as compensation.
He's not sure, but he thought that the compensation he is receiving for his auto allowance wouldn't be taxable; however, he has learned that they are in fact taking taxes out. What he wants to know is if the compensation is supposed to be taxable.
I suspect that the answer is yes.
Tue Apr 10, 2012 2:50 am
coaster Senior Advisor
Cash: $ 1626.30
Posts: 7990
Joined: 11 Oct 2005
Location: Wisconsin
It's compensation. Compensation is taxable. It's a flat amount, therefore it's not a spending allowance; it's not an expense account; I don't care what they call it, it's additional compensation so he uses his own vehicle on the job.
