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My company pays me a vehicle allowance, but it's not on my paycheck or W-2. How do I report the allowance?

If your auto allowance is paid under an accountable plan, the payment won’t be:

  • On your W-2
  • Included in your income on your return
  • Deductible on your return

To be an accountable plan, your auto allowance arrangement must meet these conditions:

  • You must have paid or incurred deductible expenses while performing services as an employee.
  • You must report these expenses to your employer within a reasonable time.
  • You must return either of these within a reasonable time period:
    • Excess reimbursement
    • Excess allowance

If your employer's plan doesn’t meet all three requirements, then:

  • The payments should be in your W-2 wages. If they aren’t, contact your employer for a corrected W-2.
  • You must report the payments as income.
  • You must complete Form 2106 or Form 2106-EZ. Itemize your deductions to deduct your expenses.

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