Car allowance AND Mileage Reimbursement?

[mekCPA]

Where I work, our General Counsel receives a Monthly Car Allowance.

She recently came to me to find out if she drives "excessively", if she can also get Mileage Reimbursement.

(by excessive, she means outside the County we live/work in).

Since then, she has turned in a mileage reimbursement request for 5 trips out of the County....from her HOME, which is further from her destination than our workplace, resulting in higher mileage reimbursement than computing it from our place of business.

Anyone have any insight on this? Or can you guide me somewhere to investigate taxability issues?

Yes, I know the mileage reimbursement must be figured from our place of business and NOT her residence.

My personal take on this is, you receive a Car Allowance, and I am betting all those OTHER months, you rarely drove "business miles" so let's just call it even, k?

There is no precedent or policy on this, we are charting new territory, and I'd like to have some decent support for not allowing it. And if it IS allowed, I am wondering if it should be reported through the payroll process, and thus taxed since it appears to be "excess car allowance".

Anyone?

Thanks in advance!

[MAMalody]

As an employer, he give the car allowance. The expectation is that that covers her business related transportation expenses. There is no requirement to turn in the amount not used on the short months and no extra given on the long months. If the employer wanted exact accounting then he would establish a written accountable reimbursement plan in which the employees would turn in her mileage each month and be reimbursed accordingly.

Just as a point of interest, the employee does not dictate terms of reimburseable expenses. The employer determines what he will and will not reimburse for. On top of that, he is not required to explain his "logic" to the employees.

As it is, she is suppose to report the allowance as income and she can deduct all the mileage on her tax return, regardless of whether it is a long or short month.

Publication 463 and 15B seem to cover this topic fairly well.

I hope this help.s

Mike

[OldJack]

A mileage reimbursement policy is that of the employer and may vary in whatever the employer approves. However, a mileage "allowance" is W2 taxable income to the employee regardless of the actual miles driven, however, the employee is allowed to deduct actual or standard milage costs on form 2106.

[mekCPA]

Thanks for your fast reponses.

I was not clear in OP that, yes, the Car Allowance is included on the W-2 for all employees receiving Car Allowance, including this General Counsel.

Unfortunately, like many companies, we do not have clear policies in place for issues like this, and we have some past practices that are not consistent.

As a result I was looking for the "easy" way out...."the law says"....but it looks like I am going to have to instead attack this from a reasonable person point of view...and each person has their own interpretation of what is "reasonable", hence:

Rock---me---hard place

Thanks, again!