How to value employer car allowance?
Jun 19, 2021, 9:49 am
#1
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How to value employer car allowance?
I have a new job offer that includes a $500/month car allowance and am not sure how to value it. I estimate I will drive about 400 miles/month, most of which is back and forth to the airport.
My current employer reimburses me actual mileage * the US government rate (I think currently $0.56/mile). This is non-taxable.
How should I value the offer and is it better or worse than my current situation?
Next year I will purchase a $50K automobile that gets 23-25 mpg.
I’m in the 24% federal tax bracket.
My current employer reimburses me actual mileage * the US government rate (I think currently $0.56/mile). This is non-taxable.
How should I value the offer and is it better or worse than my current situation?
Next year I will purchase a $50K automobile that gets 23-25 mpg.
I’m in the 24% federal tax bracket.
Jun 19, 2021, 11:01 am
#2
Join Date: Aug 2017
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If you are driving about 400 miles a month, assuming that was what you did in your old position, that would have net you $224 @ 56 cents a mile. Unless I'm missing something, this is a better offer. Unless you're driving a lot more.
Jun 19, 2021, 1:07 pm
#3
Join Date: Jul 2008
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Are you sure the 2 benefits are mutually exclusive? When my ultralarge employer offered the same car allowance, we also expensed mileage-based drives for business i.e. to/from airports, meetings, etc.
Maybe tax man thinks differently, but that was SOP for us. Car allowance I just thought of as cash compensation, and it was taxed as ordinary income. Allowance was issued so long as vehicle met policy standards of 4 doors, recent age and mileage, had safety equipment, and other properly insured.
Maybe tax man thinks differently, but that was SOP for us. Car allowance I just thought of as cash compensation, and it was taxed as ordinary income. Allowance was issued so long as vehicle met policy standards of 4 doors, recent age and mileage, had safety equipment, and other properly insured.
Jun 19, 2021, 3:16 pm
#4
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Are you sure the 2 benefits are mutually exclusive? When my ultralarge employer offered the same car allowance, we also expensed mileage-based drives for business i.e. to/from airports, meetings, etc.
Maybe tax man thinks differently, but that was SOP for us. Car allowance I just thought of as cash compensation, and it was taxed as ordinary income. Allowance was issued so long as vehicle met policy standards of 4 doors, recent age and mileage, had safety equipment, and other properly insured.
Maybe tax man thinks differently, but that was SOP for us. Car allowance I just thought of as cash compensation, and it was taxed as ordinary income. Allowance was issued so long as vehicle met policy standards of 4 doors, recent age and mileage, had safety equipment, and other properly insured.
Very good question. In my experience, car allowances are really a perk and taxed as income. Expensing normal business mileage has always been the norm in my experience as well, even with car allowance.
Jun 19, 2021, 4:13 pm
#5
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Are you sure the 2 benefits are mutually exclusive? When my ultralarge employer offered the same car allowance, we also expensed mileage-based drives for business i.e. to/from airports, meetings, etc.
Maybe tax man thinks differently, but that was SOP for us. Car allowance I just thought of as cash compensation, and it was taxed as ordinary income. Allowance was issued so long as vehicle met policy standards of 4 doors, recent age and mileage, had safety equipment, and other properly insured.
Maybe tax man thinks differently, but that was SOP for us. Car allowance I just thought of as cash compensation, and it was taxed as ordinary income. Allowance was issued so long as vehicle met policy standards of 4 doors, recent age and mileage, had safety equipment, and other properly insured.
Jun 21, 2021, 11:00 am
#6
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Granted, our allowance is a lot lower...for $100/mo, you could accept it and sign up for a new standalone service with a free iPhone and then you'd own an extra phone once the 2-yr term was up.
Jun 23, 2021, 1:12 pm
#7
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Not related to this topic, but see if that mobile phone allowance comes with a caveat of employer-issued spyware on your device. Many such offers do. Our company gives us a choice: accept a phone allowance and they install spyware on the phone, or accept a company-issued phone with the spyware. I took the phone. Bit of a pain to carry two phones, but I am not okay with the company having access to all of my personal information.
Granted, our allowance is a lot lower...for $100/mo, you could accept it and sign up for a new standalone service with a free iPhone and then you'd own an extra phone once the 2-yr term was up.
Granted, our allowance is a lot lower...for $100/mo, you could accept it and sign up for a new standalone service with a free iPhone and then you'd own an extra phone once the 2-yr term was up.
Jun 23, 2021, 3:25 pm
#8
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Not related to this topic, but see if that mobile phone allowance comes with a caveat of employer-issued spyware on your device. Many such offers do. Our company gives us a choice: accept a phone allowance and they install spyware on the phone, or accept a company-issued phone with the spyware. I took the phone. Bit of a pain to carry two phones, but I am not okay with the company having access to all of my personal information.
Granted, our allowance is a lot lower...for $100/mo, you could accept it and sign up for a new standalone service with a free iPhone and then you'd own an extra phone once the 2-yr term was up.
Granted, our allowance is a lot lower...for $100/mo, you could accept it and sign up for a new standalone service with a free iPhone and then you'd own an extra phone once the 2-yr term was up.
Thankfully my current employer both provides a phone allowance and doesn't require any spyware on the device
I have a new job offer that includes a $500/month car allowance and am not sure how to value it. I estimate I will drive about 400 miles/month, most of which is back and forth to the airport.
My current employer reimburses me actual mileage * the US government rate (I think currently $0.56/mile). This is non-taxable.
How should I value the offer and is it better or worse than my current situation?
Next year I will purchase a $50K automobile that gets 23-25 mpg.
I’m in the 24% federal tax bracket.
My current employer reimburses me actual mileage * the US government rate (I think currently $0.56/mile). This is non-taxable.
How should I value the offer and is it better or worse than my current situation?
Next year I will purchase a $50K automobile that gets 23-25 mpg.
I’m in the 24% federal tax bracket.
$500/month can cover most if not all of a 10k/3-year lease for a $50k automobile (if timed correctly). Not to turn this into a lease vs. buy conversation but if that was something you were considering, the $500 car allowance would basically cover your lease
Jun 23, 2021, 7:36 pm
#9
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Jun 25, 2021, 6:58 am
#10
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My last employer was one of the BIg 4 accounting firms. My current is a chicken finger concern. Both have the exact same guidance.
I am not challenging you, just stating my experience.
Jun 25, 2021, 7:04 am
#11
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Not related to this topic, but see if that mobile phone allowance comes with a caveat of employer-issued spyware on your device. Many such offers do. Our company gives us a choice: accept a phone allowance and they install spyware on the phone, or accept a company-issued phone with the spyware. I took the phone. Bit of a pain to carry two phones, but I am not okay with the company having access to all of my personal information.
Granted, our allowance is a lot lower...for $100/mo, you could accept it and sign up for a new standalone service with a free iPhone and then you'd own an extra phone once the 2-yr term was up.
Granted, our allowance is a lot lower...for $100/mo, you could accept it and sign up for a new standalone service with a free iPhone and then you'd own an extra phone once the 2-yr term was up.