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        • How to Avoid -- And Deal with -- Identify Theft
        • Q & A: IRS Audits
        • Are You Using the Right Business Structure?
        • Starting Planning for 2015 Income Taxes Now: 5 Tips
        • What You Need to Know About Estimated Taxes
        • Contractor or Employee? How the Income Tax Obligations Differ
        • The New Form 1095-A: Reporting Health Insurance Coverage
        • Are Your Social Security Payments Taxable?
        • Do You Qualify for the Earned Income Tax Credit?
        • Are You Eligible for Health Insurance Tax Credits
        • Employee Retirement Plans - Tax Advantages and Other Benefits
        • 5 Business Tax Credits You May Be Missing
        • New Business in 2012
        • Is it a Bad Debt or a Simple Revenue Loss? Telling the Difference
        • Business Taxes Add Complexity: How Will This Affect You?
      • Tax Scams
See also:
Publication 15-B, Employer's Guide to Fringe Benefits
Employee Affidavit for Computation of Additional Compensation  (below)

Company Automobiles and Allowances

If an employer provides an automobile for an employee, the value of the personal use portion of that automobile must be added to the employee’s compensation.

To determine the value of the personal use, the employer can use the General Valuation/Annual Lease Value, Vehicle Cents per Mile (mileage allowance), or the Commuting Value Method. Please note that certain restrictions and conditions apply to the various methods available.

The Vehicle Cents per Mile and the Commuting Value Method can not be used for a “control employee.” For benefits provided in 2014, a control employee is an employee who:
  • is a director; 
  • receives pay of $210,000 or more; 
  • owns a one percent or more equity, profit, or capital interest in the company; 
  • or is a board- or shareholder-appointed, confirmed, or elected officer of the company whose pay is $105,000 or more. 

These dollar amounts are indexed annually for inflation.

Amounts added to the employee’s compensation for employer-provided automobiles are subject to Social Security and Medicare tax and must be added to total wages on the employee’s W-2.

Under Treasury Regulations, employees must be notified of the method that will be used to value any personal use of an employer-provided auto. Since there are several methods your business may use in valuing the employee’s use of a company-provided auto, the choice of method may have a substantial impact on the employee’s taxable income.

The notice must inform the employee of which method or methods you intend to use, the applicable substantiation requirements, and the effect of failing to comply with the substantiation requirements.

If you are not sure which method you will apply to a particular vehicle, you must notify the employee as to the rules which may be applied. For example, if you intend to use either the lease valuation method, or the cents per mile method, depending on which method results in a lesser amount of taxable income, you must notify the employee that either method may be used.

You must obtain a statement from employees by January 31 of the year after the year the auto was provided. The statement must indicate that the employee knew that the employer intended to use a particular valuation rule for that year, that he was aware of the applicable substantiation requirements, and the effect of failure to comply with such requirements.

Monthly automobile allowances are considered to be a taxable fringe benefit to the employee and are subject to Social Security and Medicare tax and must be added to total wages on the employee’s W-2.

Vehicle Cents per Mile Rates:
2014:  56.0 cents
2013:  56.5 cents
2012:  55.5 cents
2011:  51.0 cents


Employee Affidavit for Computation of Additional Compensation Resulting from Personal Use of a Company Vehicle


To assist you in making the necessary calculations, use our “Employee Affidavit for Computation of Additional Compensation Resulting from Personal Use of a Company Vehicle.” This form should be completed by all “Control Employees” who are provided with a company-owned automobile.

The affidavits should be returned to us as soon as possible, so we can complete the calculations in time for you to report the appropriate amounts on income to be included in the employee’s final payroll before year-end.

Download affidavit here (in PDF version or Excel version):
employee_affidavit_2013.pdf
File Size: 401 kb
File Type: pdf
Download File

employee_affidavit_2013.xls
File Size: 33 kb
File Type: xls
Download File


Back to Year-end Reporting Obligations for Businesses
  • Home
  • About
    • Book An Appointment
  • Accounting
    • Dashboard
    • Xero+Accountency
    • Xero Intro
    • AutoMagical Accounting
    • QuickBooks >
      • QuickBooks Updates
    • Store
  • Payroll
  • Taxes
    • Dashboard
    • Individuals
    • Businesses
    • Tax Stuff >
      • Individuals >
        • Income >
          • Debt Forgiveness
          • Foreign Income
          • Gambling Income
          • Unemployment
          • Other Income
        • Deductions & Credits >
          • Adoption
          • Charitable Contributions
          • Earned Income Tax Credit
          • Educational Expenses
          • Energy Tax Credits
          • Employee Business Expenses
          • Other Deductions and Credits
        • Affordable Care Act - Individuals
        • Children and Dependents
        • Death
        • Disabled Taxpayers
        • Educators
        • Health Care
        • Identify Theft
        • Marriage and Divorce
        • Military
        • Real Estate
        • Retirement Savings
        • Seniors
        • State Taxes
        • Record Keeping
        • Who Must File
        • Other Topics
      • Businesses >
        • Affordable Care Act - Businesses
        • Year-end Reporting Obligations >
          • 1099's
          • Health Insurance Premiums
          • Depreciation
          • Reimbursed Employee Business Expenses
          • Company Automobiles
        • Employment Tax Credits
        • Independent Contractors
        • Tax Credits and Deductions for Businesses
        • Other Business Topics
        • Required Business Posters
      • Amended Returns
      • IRS Notices and Problems
      • Tax Plan >
        • All About the Earned Income Tax Credit
        • 5 IRS Audit Red Flags
        • Retirement Plans for Sole Proprietors
        • Are You Claiming All of Your Tax-Deductable Business Expenses for 2015?
        • All About Past Due Tax Returns
        • Do You Need to File Form 1099s?
        • How to File an Appeal with the IRS
        • Why You Might Get a Letter from the IRS, and What to Do
        • How to File an Amended Tax Return
        • Should You Claim the Home Office Deduction?
        • How to Avoid -- And Deal with -- Identify Theft
        • Q & A: IRS Audits
        • Are You Using the Right Business Structure?
        • Starting Planning for 2015 Income Taxes Now: 5 Tips
        • What You Need to Know About Estimated Taxes
        • Contractor or Employee? How the Income Tax Obligations Differ
        • The New Form 1095-A: Reporting Health Insurance Coverage
        • Are Your Social Security Payments Taxable?
        • Do You Qualify for the Earned Income Tax Credit?
        • Are You Eligible for Health Insurance Tax Credits
        • Employee Retirement Plans - Tax Advantages and Other Benefits
        • 5 Business Tax Credits You May Be Missing
        • New Business in 2012
        • Is it a Bad Debt or a Simple Revenue Loss? Telling the Difference
        • Business Taxes Add Complexity: How Will This Affect You?
      • Tax Scams