How do you mitigate the taxable portion of the allowances for your employees?
Car and Travel Allowances
Answers
Gross it up
We use a mileage app where they log their mileage when they get into the car to travel for business.
Wayne,
To a larger point and as with all processes, I think we need to REEXAMINE the why's and the how's of the compensation and benefit packages (i.e. allowances) we extend to our employees. Maybe because of the complexity of our
The only reason (I can come up with right now) for allowances is that the salary not at par and we need to prop it up one way or another. Somehow, we viewed these allowances as some sort of incentive to have a perception of a higher net pay. Why not just adjust the salaries and do away with allowances? If the expense really is the company's, then we should keep the process within the company and avoid it touching the employee W-2s.
There are three guiding principles I am trying to apply here.....(1) Keep it simple, (2) arm's length transaction and (3) "give to ceasar what is ceasar's"
At least that is my point of view.
Same as Christie - easiest way is to use the IRS rate and have the employees track mileage.
Are you saying you use other than the GSA rates for reimbursement? Why? Every T&E policy I have ever written references the GSA rates as the amount that will be reimbursed.
If you are talking about paying a flat amount for say a car allowance, then you need to have them report personal vs business miles. If they don't want to report, then it is all personal and taxable. At that point you have to decide whether you will gross it up when you report it or let the employee pay the taxes.
If you are a public company, you should get guidance from your BOD for any executives.