I receive a $800 car allowance and $0.24 mileage reimbursement. Why is my 401k contribution also taken from my car allowance?

[sunnyd4110]

I receive a $800 car allowance and $0.24 mileage reimbursement. Why is my 401k contribution also taken from my car allowance?

[TaxGuyBill · Accepted solution]

For income tax purposes, a flat-dollar car allowance is treated as taxable wages.

Although I suppose it might be possible to set up payroll as treating that as something other than "wages" to avoid a 401k contribution, that is not how your HR department/payroll department has done it.  That is something you would need to discuss with your HR department.