I receive a car allowance from my employer. Can I still deduct car expenses?

[PatriciaV · Accepted solution]

It depends. If, your employer requires you to submit receipts (what is called an "accountable" plan), you may not report your actual expenses.

If your employer does not require you to submit receipts for your car expenses and the amount of the car allowance is less than your actual expenses, you may deduct the difference. For these expenses to be included on your return, you must be able to itemize your deductions. Even then, only the amount above 2% of your adjusted gross income is deductible.

Note:  You cannot deduct the miles you commute to and from work, or any expenses you were reimbursed.

Employee Vehicle Expenses are entered under Deductions & Credits >> Employee Expenses.

The easiest way to find this section of TurboTax is to use the Search box at the top right side of the TurboTax header. Type in "2106", hit Enter, then click on the "jump to 2106" link to go the Job-Related Expenses section. (Form 2106 is used to report job-related expenses on your tax return).

TurboTax will help you determine if your expenses can be reported, if your total Miscellaneous Expenses meet the threshold to be deductible, and if you qualify to itemize your deductions.

[Glam25021]

How can I only deduct expenses above and beyond the car allowance? Example: the capital cost allowance is 8K. The employee car allowance is $7K. How can I only claim the amount in excess of the car allowance?

[DoninGA]

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@Glam25021 wrote:

How can I only deduct expenses above and beyond the car allowance? Example: the capital cost allowance is 8K. The employee car allowance is $7K. How can I only claim the amount in excess of the car allowance?

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If you are a W-2 employee then you cannot deduct any employee business expenses on a federal tax return due to the tax code changes in effect for tax years 2018 thru 2025.

[Hal_Al]

The original question and replies (even though dated 2019*) are out of date. The law changed, beginning in 2018. W-2 employees are not allowed to deduct job expenses, including mileage.  A "car allowance", from the employer,  is  taxable income to the employee.

*TurboTax "upgraded" this forum in 2019 and all older posts transferred with a 2019 date, even though they are actually older.