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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