EE truck useage

[Jesse]

My client's employer provides him w/ a truck, however, my client must pay the employer $3 for every work day. He says this way he is "leasing" the truck from his employer. He received a statement from his employer for year end:

105 work days x $3.00 = $315.00 - withhold Social Security and Medicare

Any ideas as to why the employer would do this?

I can't take the expenses for an employer provided truck and it's not a bonafide lease.

[JG EA]

The employer

is accounting (albeit low) for the personal use of the vehicle. Possibly for the commute.

[S T]

Fringe Benefit to Employee

Employer provided vehicles to employees which can be used for either commuting to and from work or personal use is a fringe benefit and the value must be included in the employees wages and subject to payroll tax.

There is more discussion in Pub 15B.

Sandy

[Jesse]

Thanks

According to my client, he is charged $3 only on days the truck is used for work. He is in construction and there is a tremendous amount of mileage. I am thinking that the automobile value is included in his W-2 wages even though my client says that nothing but wages he was paid are in box 1?

Sometimes I don't think the taxpayer really knows what is transpiring - they just cash their check.

If the employer is not accounting for this correctly, is it my clients responsibilty to determine a value to add into his income the fringe benefit?

I don't feel it is my responsibility to find out or to tell his employer he needs to make sure they are correctly accounting for employee provided fringe benefit.

[veritas]

You can use $3 per day for inclusion on W2 for commuting. No other personal use would be permitted.

[S T]

$3 Commute

Jesse,
It would seem your tax clients employer let him take the truck home for 105 days at $3 per day commute ($1.50 each way) and imputed that value on his W-2. Seems like the employer has reported it correctly, based on the info that you have provided.

Your client just is not understanding what transpired.

Sandy