My company is offering gas/fuel credit cards to our technicians in lieu of a vehicle allowance. However, HR is advising the techs that the cards are considered income and are therefore taxable. Is this true?
It depends on the type of expense reimbursement plan that you have. If you have an accountable plan, then you must submit expense reports to your employer to verify your gas useage, in which case the gas card use would not be taxable. If your employer has a non-accountable plan, then you use the card, they include the use in your W-2 and then you have to claim the net business expenses or net gas card use income on your personnal tax return.
Yes, but you might be able to take a tax deduction for business miles driven, if you itemize.
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Yes!
Congratulations to your HR department for pointing this out.
Think about it. You are getting free gas and not turning in any paperwork. There is no way for your company to know what your mileage is, let alone how much is for business use. While you are allowed 50.5cents a mile (2007 number) for each business mile, they don’t have a way to track it or make you turn any excess money back in. Bingo, you are not on an "accountable plan" so it’s taxable.
However, if *YOU* keep track of your miles you can still deduct them on your tax return (assuming you can itemize and you’d lose 2% of your AGI due to the way it’s entered into the return).
References :
It depends on the type of expense reimbursement plan that you have. If you have an accountable plan, then you must submit expense reports to your employer to verify your gas useage, in which case the gas card use would not be taxable. If your employer has a non-accountable plan, then you use the card, they include the use in your W-2 and then you have to claim the net business expenses or net gas card use income on your personnal tax return.
References :
The simple act of giving you a gas credit card, in and of itself, does not necessarily create taxable income.
Company credit cards of this type can be incorporated into an accountable plan for business reimbursements.
http://www.irs.gov/publications/p15/ar02.html#d0e1284
To me, it seems like it would be worth the effort to have an accountable plan. It saves both the employee *and* the employer in the taxes.
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I’m trying to figure this out. It’s everywhere, all over Google and the internet, I’m just like you I have to go work, do my job and make a living and right now the last thing I need is some company trying to pull one over on me!
I work hard for every dollar I earn and I’m always looking for a way to save one as well, I’m a thrifty person that always looks for the best deals at the grocery stores, I don’t really care about brand names and that kind of stuff, I have a family to take care of so I was really serious about finding the truth connected to this gas card thing, I figured if I could get one then that’s like cash in the bank! But is it real? I was lucky enough to have a friend tell me how she started receiving these discount cards and how it all works. So I’m going to make this real easy for you so you can start receiving your cash cards too!