Car Allowance

Paying your business drivers a car allowance can present drawbacks for everyone involved.   Consider the following:

• A flat car allowance is generally taxable for both an employer and its drivers

• Flat car allowances are generally not geographically-sensitive, and over-reimburse some drivers, and under-reimburse others.

• The unnecessary tax waste paid in most flat car allowance programs represent monies that could be invested elsewhere within your business

Fortunately, there is an alternative to paying a flat car allowance.   A properly-structured car allowance plan can be IRS-compliant while fiscally advantageous to companies and fair their drivers.