Business use of a personal car ?

Edwards Finance > Personal Budget

Q. In the past I have always had a company car. Recently I was given the option of continuing with a company car or being reimbursed on my personal car. I think I would be either given a flat monthly car allowance or receive .375 for each mile driven. The car allowance would be treated as a fringe benefit, which I think would cause me some tax headaches. I like the idea of buying my own car, however, I'm not sure of what type of tax problems might arise. My questions are as follows: 1) Would it be a mistake to move from a company car to using my personal car? 2) If I receive .375 per mile for mileage, would there be any tax consequences? Is it treated as a reimbursement? Would I have to file any special tax forms? 3) I see nothing but problems with a car allowance. Would it be trated as income? If so, do I then have to get into depreciation?

A. Are there any tax consequences of your current arrangement? Doe any income show up on your W-2 for this car? Do you have any personal use? If the current car is tax free, I would stick with it. If you record your mileage and report it to your company and they pay you for it, there are no tax consequences or reporting requirements. This is your second best option. This would be the most administratively complex of the lot. It is an employee business expense subject to the 2% of AGI limitation. Generally a bad deal. All freely provided advice guarantee correct or double your money back

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