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A few things you should know about employee provided vehicles in 2019.

Steven Brewer, CPA

May 31, 2019

Keeping our business clients, large and small, up to date and aware of information that could help or harm them, before going into preparing their taxes at the end of the year is extremely important to us at Steven Brewer and Company, CPA’s. Most recently, The TAXBOOK News came out with several pieces of information that, knowing in advance, could help the business owner in keeping more of their money in 2019 by planning in advance. Here are a few quick tips taken from that article.

First- if you own a company and you are providing an employee with a company-owned vehicle, and the employee uses the vehicle for personal purposes, then the value of that personal use must be included in taxable income on the employee’s W-2.  The calculation for that is the following;

  the taxable amount = fair market value (FMV) of the total use- the amount the employee pays

             for the use- the amount excluded from income as a working fringe benefit.

In calculating the FMV, the IRS has several methods they allow and one method is the cents-per-mile valuation. Under this method, the taxable use is determined by multiplying the employee’s personal miles by the current standard mileage rate. An employer can calculate the personal use value of the vehicle under this method is all of the following are true.

  • The employer reasonable expects the vehicle will be used on a regular basis in the employer’s trade or business.
  • The vehicle is driven at least 10,000 miles per year and the vehicle is primarily used by the employee.
  • The FMV of the vehicle at the time it is first made available to the employee for personal use does not exceed the luxury vehicle limits of IRC section 280 F.

Secondly- there are new limits for 2019. The new limits provide that a maximum value of an employer-provided vehicle, including cars, vans, and trucks, first made available to employees for personal use in the calendar year 2019 under the cents-per-mile valuation rules is $ 50,400.

So, whether you have one vehicle or a fleet of 20 or more, you and your employee(s) need to plan now.

If information, such as this, is important or confusing to you please give us a call. Planning a successful year and making the best use of your money begins now. Don’t wait until this time next year- it could, as you can see, really cost you and your employee.

For more information on this article or if you are looking for a CPA that will partner with you to get the most out of your financial investment, your business, call us today at 812-883-6938.

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