See also:
Publication 15-B, Employer's Guide to Fringe Benefits
Employee Affidavit for Computation of Additional Compensation (below)
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:
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
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):
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):
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