I work for a small company. Less than 25 employees. Three employees have a company vehicle. The owner, the GM, and office manager/HR. What kind of personal tax implications are there for these vehicles? They rarely make sales calls. At most two per year. The few trips to the hardware store and when an employee is called for a random drug test the office manager will take the employee to get tested. Do the three people that have these cars pay a per mileage tax for personal use of the vehicle?
If it is for work only then there is none on the driver, it is imputed income. Now if they are allowed to use for personal use then it may. I am not sure.
XPRESS H 18 SS, YAMAHA 115
Unless you are one of those three people what difference does it make for you?
Last 4 company vehicles I had were considered part of my pay so I was taxed on them. It was calculated by cents per mile. Really didn't add up to very much and we were allowed to use the vehicle as if it belonged to me.
Last edited by Rider99XX; 04-23-2024 at 11:51 AM.
Hi Mike.
ttranger raised a good question...why do you care?
Because there has been talk about 3 equal partners to buy the company after the current owner retires. Myself the GM and the office manager. That's why I am looking for general information right now.Originally Posted by ttranger
And what difference does it make for you to respond to a post in such a manner??
Maybe put the info about possibly buying? Honestly, your post came off as someone who was worrying about something that had nothing to do with themselves. Good luck with your possible purchase.
I am part owner of a a heavy highway construction company. We have a plethora of company vehicles. The only tax implication is at the company level. I get to depreciate the asset and and deduct all operating expenses. There is zero tax implicatons to the employee. If they use it for personal use so be it.
What we cannot obtain from intelligence, we can learn from experience.
Oh and for the record I drive a company truck as a safety specialist, it comes home with me but can only be used for work, and because it is imputed income it does nothing to my taxes.
XPRESS H 18 SS, YAMAHA 115
Keep a a record of the personal and business miles you put on it for your tax records and report them based on cents per mile allowed by the IRS. You have the mileage records of your personal taxes and the company’s so the company can write off the vehicle expense if you or the business ever get audited you have all the records.
It’s no big deal just keep your own trip log or one in the vehicle since there are multiple users. Just make sure to record odometer readings to back up your figures.
Agreed - my wording was poor - I would be asking the company accountant or your own accountant for professional advice on how to handle that.
If you are looking to purchase the business you would be better off doing your due diligence with a CPA. ALL of our opinions are free so you are getting what you payed for����
2018 Z521L 250 PRO XS V8
The tax aspects of vehicles is a pain. If vehicles are provided to employees, there is generally going to be income reported to the employee for personal use and/or commuting. Owners and officers can only use one method as opposed to employees that have three options. The article below offers another explanation of how it works. Please consult with your accountant who can go into more detail.
https://www.thetaxadviser.com/issues/2022/nov/employer-provided-company-owned-vehicles.html
Men and fish are alike. They both get into trouble when they open their mouths. ~Author Unknown
I had a company vehicle in Wisconsin. We were allowed to use for unlimited personal use. Had to fuel it out of pocket based on your personal use but also had a company fuel card. This was basically a honor system. I never really drove the vehicle for personal use with exception of going to the grocery store or something like that for the wife. Some at my level in the company didn't even own a personal vehicle. Just had what the company provided. Since it was given to us for work and personal use we had to report personal miles that were taxed as income. It was very minimal and again was kind of a honor system type of reporting.
The base for the personal miles was the commute from your home to work round trip. That was considered personal use. I was 60 miles round trip so the personal use portion I paid taxes on was much better than racking up those miles on my personal truck. I was also only getting taxed for driving to the office two days a week on average for the year as many mornings would start with me going to a project opposite direction of the office.
The company I am with now has provided a company pickup. I can drive it home if I choose. It's about 50/50 whether I do or not as office is only about 2 miles from the house. It's not allowed for personal use (though if asked the owner would allow) and there are no personal tax implications.
It was explained to me that if it provided by the company and allowed for personal use then it is a provided benefit that is taxable. If it's provided for company use only there is no taxable benefit as it may be in the companies interest to allow you to take it to / from home for start up travels the next day / end of day.
When we had one the company wanted to let us claim personal miles as income on our taxes. They leased the cars so we negotiated a pro rated amount of their depreciation based on our personal mileage. If you don't have access to the financials you'll never know what that value may be. It was a sweet deal since they paid for gas, insurance, maintenance, everything and we drove it anywhere we wanted for a few hundred a year in taxes. We turned in a MileIQ spreadsheet at the end of every quarter recording personal and company mileage. You could also track with pen and paper, but the app made it real easy. BY FAR the biggest issue was employees not taking the time to maintain their leased vehicles. I never understood it, but it was a huge issue that had to be addressed.
As with most things "tax" there are a bazillion different scenarios that can confuse an employee.
Disclaimer: Neither of us are tax pros! We hire that skill set.
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