Where would you put it?

[dan doshan]

Client received a 1099Misc in the amount of 6750 dollars reported in box 1. Client indicates that this is for amounts the employer reimburses or pays him for the use of his vehicle in his capacity as a construction mgr / supervisor that travels to various distant locations. Would you put on 2106 as reimbursement against his vehicle expense or on line 21 other income. Or even possibly on Sch E as box 1 of 1099 Misc seems to indicate this is for rents or royalties. The client does refer to this amount as rental of his truck by his employer.
Personally I think the amount probably should have just been included in his wages in the first place but who knows.

Last year I did just include on 2106 as reimbursement received against his vehicle expenses, but now think that might not have been the best idea.

[ChEAr$]

Client received a 1099Misc in the amount of 6750 dollars reported in box 1. Client indicates that this is for amounts the employer reimburses or pays him for the use of his vehicle in his capacity as a construction mgr / supervisor that travels to various distant locations. Would you put on 2106 as reimbursement against his vehicle expense or on line 21 other income. Or even possibly on Sch E as box 1 of 1099 Misc seems to indicate this is for rents or royalties. The client does refer to this amount as rental of his truck by his employer.
Personally I think the amount probably should have just been included in his wages in the first place but who knows.

Last year I did just include on 2106 as reimbursement received against his vehicle expenses, but now think that might not have been the best idea.

FORM 2106 is the answer. You were right last year.

[DMICPA]

Rent to Employer

It would seem that this transaction is solely related to the clients employment and the 2106 would be more appropriate than a rental schedule E.

I would opt for the 2106 as a reimbursement.

[dan doshan]

Thanks for collaboration ... Just wonder if IRS will be looking for that amount on the return. They may not note buried in 2106. But will do that way again this year.

[MilTaxEA]

Client received a 1099Misc in the amount of 6750 dollars reported in box 1. Client indicates that this is for amounts the employer reimburses or pays him for the use of his vehicle in his capacity as a construction mgr / supervisor that travels to various distant locations. Would you put on 2106 as reimbursement against his vehicle expense or on line 21 other income. Or even possibly on Sch E as box 1 of 1099 Misc seems to indicate this is for rents or royalties. The client does refer to this amount as rental of his truck by his employer.
Personally I think the amount probably should have just been included in his wages in the first place but who knows.

Last year I did just include on 2106 as reimbursement received against his vehicle expenses, but now think that might not have been the best idea.

Accountable or unaccountable plan? If unaccountable, then I would place it on Line 21. However, the employer would be in the wrong since it should be reported on the W-2.

If accountable, then I would report it on line 21 and step it out (add a negative amount) since the payments are not taxable.

I would also include it on the 2106 regardless.

[dan doshan]

Not an accountable plan. Just paid a flat amount each month. I too believe that the employer probably should be including this amount in W2 wages but they do not and I assume will not and am not going to press this aspect. The employer and client appear (emphasize appear to be) considering as some sort of rent paid to the client for the use of his truck. Note they include this amount in box 1 of the 1099misc. Although all the client is doing is using his truck to travel all over to various job sites as a supervisor.

[MilTaxEA]

Then I would definitely report it on line 21. A reimbursement under a non-accountable plan must be fully included in income. Even if they consider it "rent", it still needs to be reported as income.

The employer better hope that the state and IRS does not figure out about this or they will owe some serious back taxes.

[taxea]

You have no control on how the employer does his books. If the agreement is that they will pay a set amount as reimbursement for the use of the truck then I agree with 2106 as the appropriate place to put this amount.
Just to be sure you have it documented for the IRS I would input it on Ln21 and back it out with a simple statement that says "reported on 2106 as vehicle reimbursement". The IRS "Darling" probably won't look for it on 2106o but having it in/out of Ln 21 may keep a notice from being sent to the TP
The things we have to do to satify 'DARLING"!!!!

ps I am still looking for a better name for the IRS computer....anyone care to make a suggestion...

[dan doshan]

Maybe but ... by backing out the amount which probably should have been included in wages in the first place you could effect other items on the tax return.

Is it effect or affect. Never could distinguish between the two?

[Burke]

Not an accountable plan. Just paid a flat amount each month. I too believe that the employer probably should be including this amount in W2 wages but they do not and I assume will not and am not going to press this aspect. The employer and client appear (emphasize appear to be) considering as some sort of rent paid to the client for the use of his truck. Note they include this amount in box 1 of the 1099misc. Although all the client is doing is using his truck to travel all over to various job sites as a supervisor.

You can advise the employer he is reporting it incorrectly. Note Instructions for Form 1099-MISC, page 7, Payments Not Reported in Box 7: Do not report in Box 7 nor elsewhere on Form 1099-MISC, .... an...auto allowance,...(report on Form W-2.)"
It is reported in Boxes, 1, 3, 5 and is subject to all employment taxes. It is definitely not rent. Nor treated as a reimbursement. However, once this is treated correctly from the employer's end, the employee may deduct mileage (or actual expenses) based on legitimate business use of his vehicle and no reimbursement is taken on 2106.

[erchess]

It's affect

You might effect a change in the employer's payroll practices by pointing out the consequences of what he is doing now. Effect as a verb means to carry out a process.

On the other hand your words might not affect the employer's behavior at all. Affect as a verb means to change someone or something.

Wait, it gets worse. Effect and affect can also be nouns instead of verbs. Effect as a noun means the result of something done. The city lowered the speed limit on my road but there has so far been no effect on the speeds at which people drive. Affect as a noun is a display of emotion and the term is mainly used by mental health professionals.

[taxea]

You can advise the employer he is reporting it incorrectly. Note Instructions for Form 1099-MISC, page 7, Payments Not Reported in Box 7: Do not report in Box 7 nor elsewhere on Form 1099-MISC, .... an...auto allowance,...(report on Form W-2.)"
It is reported in Boxes, 1, 3, 5 and is subject to all employment taxes. It is definitely not rent. Nor treated as a reimbursement. However, once this is treated correctly from the employer's end, the employee may deduct mileage (or actual expenses) based on legitimate business use of his vehicle and no reimbursement is taken on 2106.

I wouldn't consider it rent either, by any means..but it is not your place to correct the employer so I say, in this case, perhaps line 21 with a link to line 7 1040 is the more appropriate way to handle it.

[Short Stuff]

Should be on a W2

You should let your client know that the way the employer is treating this is not legal and it should be treated as wages. I would put this in the form for unreported tips in order that your client pay in his share of the Fica Taxes then I would fill out the 2106 (if he has any records) and not put in anything as having been reimbursed as the Reimbursements have properly been added to his income and he should be able to deduct all of his expenses just like he would have if these funds has been appropriately handled in the first place.

[Kram BergGold]

line 21

Whether it is on 2106 or line 21 the return will be the same. i just like the greater visability of line 21.

[Roland Slugg]

Well, your client's employer certainly made a mess of things by reporting the vehicle allowance on a form 1099-MISC ... and on Line 1 of that form, no less! It should have been reported on form W-2, and I agree with those who suggest the employer should be told how to do it correctly from now on. Even if the employee and employer signed a lease agreement for the use of his truck, the payment should be reported on form W-2, not on a form 1099-MISC.

I would report the $6,750 on F-2106, line 7, as per the instructions for F-2106. Contrary to what others have advised above, I would not report the $6,750 on F-1040, line 21, nor should it be reported on Schedule E (Form 1040). From F-2106, if there is a net reimbursement, on line 8, it will then go on form 1040, line 7, and if there is a net expense, it will go to Schedule A (Form 1040), where it will be subject to that form's 2% N/D floor.