Reimbursement for gas/cellphone

Forum|Forum|3 years ago
July 9, 2022
6 replies
12 views

I am a w2 employee. My employer automatically gives me a separate $200 check every month for auto expenses as well as $50 check for phone expenses. This is not part of my direct deposit. I dont have to show the employer any receipts. How does this work for taxes? Can I use it for anything or must it be specifically for the car?

Critter-3

Level 15

Does he issue you a 1099-NEC for this amount?

xmasbaby0

Level 15

W-2 employees cannot deduct anything for job-related expenses on a federal tax return. Your state laws might be different. Ask your employer if the $200/month is being included on your W-2----it is very likely being added to your W-2. You will simply enter your W-2 exactly as it appears when you prepare your tax return. You are not going to enter anything on your federal tax return about car expenses, mileage, or phone bills for your W-2 job

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

xmasbaby0

Level 15

@babblefiesta Please reply with an answer to the question asked by @Critter-3, though. If you will receive a 1099NEC or 1099Misc for the gas/phone money then we have different information to give you regarding your next tax return.

babblefiestaAuthor

Level 2

Thanks. I just started this new job last month. I will ask him to clarify if this income will be reported on my w2 or included in a separate 1099

Carl

Level 11

As an addendum:

I wonder if your employer is aware of what an "accountable reimbursement plan" is for job related expenses. You may want to inquire about that also.

With an accountable plan, you are required to provide receipts for those work related expenses, and the employer reimburses you for the expenses you can prove with receipts. That way, the employer gets to deduct the expenses as a business expense, and the amount does not have to be reported to you by the employer, or included on your W-2.

Opus 17

Level 15

If you receive funds for expenses and you are not required to account for those expenses, they must be included in your taxable income. They must be included in your W-2 wages, and the reimbursements are subject to Social Security tax withholding, Medicare tax withholding, and income tax withholding. Your employer is not allowed to issue a 1099-NEC for these reimbursements. Everything of value that you receive from your employer as compensation for your work must be included in your W-2 wages.

If your employer is not reporting the reimbursements to the federal government as wages, then your employer is cheating the government. If your employer reports the reimbursement as taxable income on a 1099, your employer is cheating you.

Your employer can reimburse you for legitimate expenses tax free if you are required to prove your expenses. Your employer may give you an advance on your expenses, as long as that advance is reconciled in a timely manner with proof of your actual expenses.

rjs

Level 15

"Your employer may give you an advance on your expenses, as long as that advance is reconciled in a timely manner with proof of your actual expenses" . . . and you promptly pay back any advance in excess of your documented actual expenses.

rjs

Level 15

@babblefiesta wrote:

Can I use it for anything or must it be specifically for the car?

No one has responded directly to this part of your question. Since the additional monthly payments that you get are considered additional wages, you can use the money for anything you want, just like your regular pay. Since your employer does not have an accountable plan, the payments are not expense reimbursements. Even though your employer says they're for car expenses, they actually have nothing to do with your car expenses. They're just additional pay that you can use for whatever you want.