Is an automobile allowance taxable?
Our minister receives a fixed amount annually for use of his personal autmobile. This amount is not based on actual mileage, and is not supported with receipts.
It is paid in equal monthly payments. We do not count this amount as compensation and do not withhold any taxes against it.
I believe the minister does not pay income tax on this amount. Does the IRS consider such a payment to be taxable?
Yes. It is definitely considered income. The only allowance the IRS now recognizes is the housing allowance.
If his "business" mileage was set up as a reimbursement in an account reimbursement plan with a mileage log as his receipt, it would be tax-free income.
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