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Vehicle Allowance/ Truck

Ruffmike's picture

I am considering a job offer from another company.


I currently have a company truck and gas card.


Other company won't give me a truck right away but are offering $75 a week vehicle allowance. Gas will run about 40 to 50 bucks a week.


Is this going to screw me tax wise? Will the allowance be taxed as income?


Lots of other good reasons for making the switch, but this seems like a drawback.


                            Mike


    Trust in God, but row away from the rocks.

                            Mike

    Small wheel turn by the fire and rod, big wheel turn by the grace of god.

(post #119678, reply #1 of 50)

I guess the first clarification to ask about is if you already have a truck that will suffice for you until(if) they provide a company truck?

To me if they pay $75 a week and you have spend $50 of it on gas, that leaves $25 a week for maintenance, insurance, tags, payment, etc.

I don't know about other guys, but $25 a week doesn't even start to cover those expenses. For me, insurance is about $22 a week, tags average out to about $3.70 a week, oil changes are a few bucks a week (I do about 500 miles a week and get it changed every 3,000 miles), payment alone is close to $100 a week. Tires are coming due so thats another $600-700 bucks for maybe 24 months use or another $6.25 a week.

Even if gas is separate from the truck allowance, you'll still fly through the rest of the allowance every month.

Their offering a truck allowance because they know what it really costs to put a truck on the road day in and day out. At $75 a week, they come out ahead - way ahead.

 

 

(post #119678, reply #2 of 50)

I think they need to give you money based on a mileage log, otherwise it might be considered taxable compensation. I've worked for a couple of outfits that paid mileage on my truck, and I had to turn in logs. A flat rate per week won't cut it.

(post #119678, reply #3 of 50)

we get $300 a month plus $150 a month for insurance and 0.40 a mile

(post #119678, reply #10 of 50)

My comments were not based strictly on knowledge but on what I observed twice, working at two larger companies, the kind that have lawyers and accountants around to figure this stuff out. Both of them paid based on mileage logs only, no allowances. You can end up with a LOT of dough that way if you drive much. Current IRS rate is 50.5 per mile.


If I were the recipient of any sort of truck money, I would want it based on a log in case I were audited myself. Actually, I AM the recipient of mileage reimbursement--I drive a personally owned truck and my corporation reimburses me for its use based on logged miles. Both the atty and CPA said to do it that way.


It would be interesting to hear from someone who has been audited on this issue. 

(post #119678, reply #5 of 50)

Not strictly so, because for our work, a truck is a tool used for other things than merely getting there compared to a salesperson who travels from customer to customer. We need to use the truck on the job too.

 

 


Welcome to the
Taunton University of
Knowledge FHB Campus at Breaktime.
 where ...
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Oh Well,

We did the best we could...

(post #119678, reply #6 of 50)

 Thanks to all who replied, I guess I'll have to research this some more.


 The truck in this case is more of a perk than necessity, we rarely carry any material, just tools. I currently have a minivan that I'll have to change insurance from partial driven to daily.


 I am hesitant to demand a truck simply because of being the "new guy" and other foremen coping an atitude towards me at a time when I'd be trying to fit in.


 This is going to take some thought, I have been where I am at 12 years.


                            Mike


    Trust in God, but row away from the rocks.

                            Mike

    Small wheel turn by the fire and rod, big wheel turn by the grace of god.

(post #119678, reply #4 of 50)

an allowance is not taxed as income unless it is outrqageously unreasonable - sucdh as paying you 400 a week salary and 500 a week truck allowance and 400 a week tool allowance.

 

 


Welcome to the
Taunton University of
Knowledge FHB Campus at Breaktime.
 where ...
Excellence is its own reward!

 

 

Oh Well,

We did the best we could...

(post #119678, reply #8 of 50)

Piffin,


 Look into cafeteria plans.


  tool allowances mileage allowances etc. are all untaxed income, saves you from paying social security taxes etc.. on money used for legitimate expenses. So it's to the employers benefit as well as the employees benefit..

(post #119678, reply #11 of 50)

SS may not be there when he needs it but the more you pay in (at least in theory) the higher your payouts will be if the system is not bankrupt.


Someone else mentioned the mileage as "business exp", believe it would be employee expense.

For those who have fought for it Freedom has a flavor the protected will never know.

(post #119678, reply #12 of 50)

IIRC driving home to and from work does not count as business miles.

home to office, no $, office to site, $

 


bobl          Volo, non valeo


Baloney detecter    WFR


"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG

 

bobl          Volo, non valeo

Baloney detecter    WFR

"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG

(post #119678, reply #13 of 50)

to Piffen Frenchy etc.- could you elaborate more on that"truck allowance, tool allowance not taxable situation"?

Let's say employee currently earns $25/hour

assuming employee agrees--- I could actually change rate of pay to say---$20/hourpay plus $2.50/hour tool allowanceplus $2.50/hour truck allowance?
and the tool and truck allowance portions are not taxed for the employee
AND most importantly not subject to Workers Comp ?--------
as a roofer--workers comp makes SS taxes look like chump change

this scenario would seem to fall under the category of" it sounds to good to be true?"
stephen

(post #119678, reply #14 of 50)

My understanding is vehicle allowance is an expense to the business- not a wage and therefore, usually paid by separate check. The recipient is obligated to claim the $ on his/her tax return offsetting either actual mileage or depreciation and actual expense.

I'm less certain how tool allowances work since I've never paid or received one. I hope someone chimes in.

As always best check with your accountant as to what's reasonable and legal both tax and insurance wise, as at some point it could be construed as fraud.

Jim

 


 


 


 


The awful thing is that beauty is mysterious as well as terrible. God and the devil are fighting there, and the battlefield is the heart of man.
- Fyodor Dostoyevski

 

 

 

 

The awful thing is that beauty is mysterious as well as terrible. God and the devil are fighting there, and the battlefield is the heart of man.

- Fyodor Dostoyevski

(post #119678, reply #20 of 50)

FNbenthayer, 


Only the portion of your car use for personal needs needs to be claimed.. If your first stop from leaving the house is business related and not personal use that's the start point.. However if you commute to work and then use your vehicle to run erands etc. for the business those are deductable from the mileage..


  The fine print is pretty tricky and there are all sorts of things and rulings etc.. on the subject.. your best source isn't a tax guy unless he's had recent experiance with the IRS.  It seems like every year exact rulings varied somewhat.


  In my case I simply didn't use my work vehicle for personal use so I got to write off everything.. Even personal use is a little complex.. I think the last ruling I saw was that if you used your vehicle to carry something home, groceries, material etc.. on your way home from work it was persoanl use if on the other hand you picked up something personal during the day as part of a ruetine stop and carried it with you it was allowable.. My take is that if you made other business related stops after you picked up something personal the whole trip could be claimed..

(post #119678, reply #17 of 50)

That is pretty much all as you outlined it. Any accountant can detail a cafeteria plan for you. There can be other allowances, such as housing for migrants or preachers, uniforms for nurses and UPS delivery persons, IT allowance for those in tech who work from home, whatever is necessary and job attached.

They see it this way - you could hire the person and pay X dollars an hour and then provide non-taxable benefits such as these and health insurance dierectly. Like - you could buy a company truck fleet and allow your primary people to take them home. Or you can provide a truck allowance and let them deal with all the headaches that go with vehicle ownership.

remember out discussion on tools? You can buy them the tools and then they lose them or don't take care of them. But when they buy the tools themselves, they are more proud of them and take care of them. your tool allowance makes that possible.

The one part of your Q I am less certain of is whether you can back out and pay less and substitute the benefits package instead of wages. There may be a rule against that. When I have instituted it or seen it added to a company pay package, it was instead of a raise that year. It also must be available to every employee, not just select ones, I think.

 

 


Welcome to the
Taunton University of
Knowledge FHB Campus at Breaktime.
 where ...
Excellence is its own reward!

 

 

Oh Well,

We did the best we could...

(post #119678, reply #18 of 50)

Hazlett


  You need to get details from a good tax person.  All I know is I took home more with a cafeteria plan and less income than I did without one.. MY boss wasn't a person who enjoyed paying any more taxes than he had too.  So it clearly was worth it to him since there is some adminstration involvement with it..


  There are a lot of things that can be in that cafeteria plan.. Day care, medical, car allowance, tool expense etc.. etc. etc..

(post #119678, reply #19 of 50)

I think I'd much rather get paid a set amount per mile according to the log, that a straight fee each week. I've never had a vehicle supplied for me same goers with tools. This is something that is part of the trade and area personal thing. At least to me.

ML

(post #119678, reply #22 of 50)

Suppose you were only driving the rig a hundred miles a week.
At the mileage rate, you only take down say fifty bucks. The straight allowance looks better then.

But if you are driving a thousand miles a week, darn right you want the mileage rate!

 

 


Welcome to the
Taunton University of
Knowledge FHB Campus at Breaktime.
 where ...
Excellence is its own reward!

 

 

Oh Well,

We did the best we could...

(post #119678, reply #23 of 50)

MSLiechty


  Taxes are a subject I leave to the pros.. and not all pros are good.. The best are those who have had recent experience working for the IRS.  (and not in just a clerical position either)..


  All I can tell you is that before I found my tax person I was paying the same percentage of income most others pay.. Oh I tried the computer programs,, H&R Block and the other tax preparers. I did one by myself and actually found more deductions than the tax preparer did.  I think that year I was paying something like 35% of my income in federal taxes,  plus another 18% to the state..


  One of the guys I worked with told me I was stupid.. he gave me his tax guy.. I wound up paying just 2% and 3% to the state..


  I was terrified of an aduit but he kept assuring me that everything was legitimate..


  Now 25 years later I take his numbers without a qualm.. Not once has anything been questioned. He's a real stickler for documentation and proof but as long as I have legitimate deductions it's never been a problem..


      

(post #119678, reply #24 of 50)

Been down that road, and have been through an audit. Won't even consider doing taxes myself now. My current employer allows me to fill up at work as long as I own a Diesel truck. I figure this saves me $450.00/ month and the Dodge 3/4 ton 4x4 CTD is much nicer than what i was driving. Making the payment is really a no brainer for me, but free fuel is on the line.

ML

(post #119678, reply #25 of 50)

MSLiechty


 I've been aduited once.. everything as prepared by a professional tax preparer and I had full documentation covering everything..


  They called me in and challenged a claim of a bad debt.. Since I had full court approved documentation and everything else was well documented as well I thought I was covered..


      The aduiter looked at me and said well let's go back to last years return then,, do you have the documentation for that? "Gulp, ah no, but I'm sure I do back on base."  Ok bring it and the returns for the last 7 years.


 We'll find something to disallow.


  Long pause, or you can settle right now, write me a check for $500.00 and we'll call it good.. I don't have $500.00


    Well how much do you have?


 I showed him my check book and I think my balance  was like $46.00


OK make it for $46.00 I'm feeling generous..


 I wrote the check and knew I'd been screwed but I wasn't about to fight the IRS..  

(post #119678, reply #26 of 50)

Ouch.. That no good. Mine cost me a couple thousand in extra's They thought was due them.

One more reason why we need a "FAIR" tax

ML

(post #119678, reply #27 of 50)

MSLiechty


 MY idea of a fair tax is one paid upon purchase of anything.. Don't want to pay taxes? don't buy anything!Eliminate income taxes completely put a national sales tax on anything sold.. (no exceptions!)


 If you buy anything be it lunch or a business.. Stock or bubble gum there is a federal sales tax collected..


  The rich would really pay the most taxes, the poor pay the least and you wouldn't need to ever fill out another tax form..


  

(post #119678, reply #28 of 50)

Yep Thats the best idea I've heard
Make it a consumption tax.
Abolish the IRS.
Get rid of all write offs etc...

ML

(post #119678, reply #29 of 50)

I don't agree that the rich would pay the most. The basic stuff is the same price for all and thats where most of my money goes.


Sure the next BMW will have more tax content than the KIA, but thats a every 2 - 3 years type purchase.

(post #119678, reply #33 of 50)

USAnigel


  Please give it some additional thought.. A sales tax on everything! That includes stocks, bonds or buying General motors.  The very rich don't spend as much proportionally on food clothing or shelter as the middleclass and poor do, However they do buy stocks bonds and other investments. They don't let their money just sit around and be eaten by inflation..


   If Ford Motor company buys steel to stamp a fender out they pay a tax on that (as well as the presses etc.. (no exemptions!)  However, It would be in their interest to make as much stuff as possible rather than buying componants (some of which are imported)  That would keep jobs here..


    Finally the simple beauty of such a plan.  No paperwork, no tax forms, simple to police, fair, understandable. and not open to any shinanagains..  

(post #119678, reply #31 of 50)

Sounds good, except guys like my ex-wife's first husband. 


He owns a manufacturing jewlery store.  Barters for everything he can. 


New car for the teenager: trade a tennis bracelet for a 69 Mustang, with a bad engine; then trade ear rings for the mechanics girl-friend, for a new engine.  Both of which are made up from "floor sweepings", and diamonds "broken" or "chipped" during setting. 


New sprinkler system for the yard, diamond posts for the landscapers wife. 

(post #119678, reply #34 of 50)

jigs-n-fixtures,


  I don't suppose it would surprise you that he's breaking the law.. barter isn't immune from taxes.  There are whole chapters on it in the IRS manual..


  Talk to any tax guy and he'll give you the outline..


 Besides, by evading taxes he's putting an additional burden on you.(and every other tax payer who pays his fair share)   If you know these things to be a fact and not just rumor you can turn him in and get a reward of a certain percentage of the amount recovered..

(post #119678, reply #37 of 50)

Sure, I could do that.  But then he is in jail, not making his $1200 a month child support for the four kids she had with him, and she can't make the house payment. 


Which leaves her, those four kids (who I still am close to), and the daughter I have with her without a place to stay. 

(post #119678, reply #38 of 50)

Jigs-n-fixtures


  The IRS puts people in jail only as a last resort.  They want money, not prisoners..


  I understand your reluctance to fink on someone. we're trained that's not a good thing to do.. I accept that.. on the other hand it's not nice to cheat on your taxes either.   In the end I guess it's up to you.. as for me I won't take part in those barter systems in part because it leaves me holding the bag of taxes due and tempting as it would be to save the taxes I have to recall the risk I'm taking and I've long ago decided that cheating isn't something that I want to do..

(post #119678, reply #32 of 50)

Things like that are where you need knowledge and a representive.

For instance, they can't go back but thirtreen years unless they find something wrong in your current year, then if they find something in those three, then they can go back seven.

 

 


Welcome to the
Taunton University of
Knowledge FHB Campus at Breaktime.
 where ...
Excellence is its own reward!

 

 

Oh Well,

We did the best we could...