A Working item in the Sept. 6 Business section incompletely characterized the tax treatment of how employers handle employee use of company cars. Employers are already required to treat personal use of vehicles as income to the employee or take an after-tax deduction from pay for the value of such use. But employers may not use the cents-per-mile valuation method for any vehicle worth more than $14,800. (Published 9/8/2005)
Company Car, Your Gas
If you drive a company car, you may not have felt the pinch of higher gas prices -- yet. But that could change in coming months, one expert predicts.
More companies are likely to start charging workers for personal use of company cars, said Lee Czarapata, director of client relations for Runzheimer International, which studies travel costs. The Internal Revenue Service uses Runzheimer's research to set the annual standard mileage rate, currently 40.5 cents a mile.
If you tool around on weekends on your employer's gas, expect a paycheck deduction, Czarapata said. And if you're driving your own car for business and receive a standard mileage rate, there's scant hope of an increase this year. The IRS sets it just once a year, usually in late fall for the next year.
Czarapata said companies don't like to increase the rate for rising gas prices then cut back later. He suggested that workers keep all car-related receipts and other documentation to see if the totals are higher than what they receive.
The extra paperwork may drive you to distraction, but it could save you in tax-deductible unreimbursed business costs -- maybe enough for a couple of fill-ups.
-- Vickie Elmer