Commuting Reimbursement

Today TaxMama hears from John in the TaxQuips Forum, who just got a promotion.
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“ I get a monthly salary as well as a $400 travel allowance.  I live across the border in another state and have a 60 mile round trip as well as tolls.
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  My employer thought it would be good to write me a separate check for $400 a month for my expenses with no payroll taxes taken out.  I do not believe this is correct.
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Dear John,

Congratulations on the raise! That’s always wonderful.

 And what you are doing here is protecting your employer.
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We know she means well.  But YOU are right.

Here is the IRS guidance on the reimbursement issue.  The reimbursements should be taxed as payroll.

As to the commuting – here is that information.  However, if you can figure this out, your employer can provide a company vehicle to be used only for the job and commuting – and charge you very little for its use.  Keep up the successes!

 And remember, you can find answers to all kinds of questions about employee business expenses and other tax issues, free.
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Where? Where else? At www.TaxMama.com.

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