Question by Jay: What does it mean to have a “car allowance” as a perk working at a car dealership?
I have worked at a car dealership before but this was never a perk. I applied for a sales consultant position and one of the perks was a car allowance. This isn’t the same as a “company car” perk is it?

Best answer:

Answer by UCANTCME
The business use of the car is an employee business expense on your tax return.

The drawback is that these expenses are an employee business expense and you only get a deduction to the extent that such expenses exceed 2% of your adjusted gross income for the year.

Generally speaking you will find that there is not much if any tax benefit for the expenses while you are paying tax on the car allowance.

This is called a non-accountable plan. If your employer had an accountable plan they would reimburse you for the business use of the auto and not include it in your income. This is a little more work on their part but it usually is cheaper for the employee from a tax point of view.

Know better? Leave your own answer in the comments!

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My wife and I purchased a new car in 2006. The car is used for both personal use, and for use in my business. Can I deduct anything on my taxes in regards to the purchase of this car? Would I be listing the car as a business asset?

Yes, you can. However, the IRS only allows you to take pieces over time. You’ll need to look into the instructions for depreciation or form 4562.

Most cars are subject to the luxury auto limits meaning there is a cap as to how much you can deduct as depreciation expense each year. For someone that has never dealt with this before, it can seem very complicated. Now might be a good time to hire a CPA to handle your return. Part of the cost (for the CPA) is also deductible as a business expense!

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