Car Expense

by Julire
(Iowa)

Previously our Pastor was receiving a car allowance. Which was the same amount each month and added to his salary check, along with his housing allowance.

This year he is receiving a car expense. He is keeping track of miles and getting paid the IRS mileage rate.

When a w-2 is sent out is the car expense treated like a car allowance? As being added to his salary?

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Jun 20, 2021
Accountable Reimbursements
by: Vickey

Depends =)

If you have an accountable reimbursement set up (see my page on how to set up and administer an accountable reimbursement plan by clicking on "Resources" in the top navigation bar and then go down and click on "Administration". Then scroll down to the 2 articles on "Accountable Reimbursements".

If you have an accountable reimbursement policy set up, make sure his mileage log or the documentation he is turning in...meets all of the federal requirements for a tax free mileage reimbursement.

If all of the above is true, then the reimbursements are completely tax free and should NOT be recorded on Box 1 of the recipient's W-2.

I don't usually run those reimbursements thru the payroll, but if you do ... make sure it is set up as a nontaxable payroll item.

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