If we give an employee a monthly car allowance, must it be included in the employees taxable wages on their Form W-2?
Generally yes, unless paid under an accountable plan. To be an accountable plan, your reimbursement or expense allowance arrangement must meet the qualifying requirements, explained later. A reimbursement or expense allowance arrangement is a system by which you substantiate and pay the advances, reimbursements, and charges for your employees’ business expenses. If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. Qualifying requirements. To qualify as an accountable plan, your reimbursement or expense allowance arrangement must require your employees to meet all of the following rules: • They must have paid or incurred deductible expenses while performing services as your employees, • They must adequately account to you for these expenses within a reasonable period of time, and • They must return any excess reimbursement or allowance within a reasonable period of time.
Generally yes, unless paid under an accountable plan. To be an accountable plan, your reimbursement or expense allowance arrangement must meet the qualifying requirements, explained later. A reimbursement or expense allowance arrangement is a system by which you substantiate and pay the advances, reimbursements, and charges for your employees’ business expenses. If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. Qualifying requirements. To qualify as an accountable plan, your reimbursement or expense allowance arrangement must require your employees to meet all of the following rules: • They must have paid or incurred deductible expenses while performing services as your employees, • They must adequately account to you for these expenses within a reasonable period of time, and • They must return any excess reimbursement or allowance within a reasonable period of time. Please refer to
Related Questions
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- Since designated Roth contributions are already included as part of wages, tips & other compensation on Form W-2, must designated Roth contributions also be identified on Form W-2?
- If we give an employee a monthly car allowance, must it be included in the employees taxable wages on their Form W-2?
