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cdawg
New Member

I received a 1099-Misc for the use of my vehicle, it's considered a car allowance.

Do I consider this "income from your business for the rental of Personal Property" or "nonbusiness income from the rental of personal property"?
1 Best answer

Accepted Solutions
Hal_Al
Level 15

I received a 1099-Misc for the use of my vehicle, it's considered a car allowance.

Your employer is doing it wrong. A car allowance should be added to box 1 of your W-2 as taxable income. Ideally your employer issues you a corrected W-2 and a corrected 1099-Misc showing $0.

Assuming that's not going to happen,  enter the 1099-Misc at the 1099-Misc screen, in TurboTax(TT). When asked why you got this 1099-misc, answer "nonbusiness income from the rental of personal property". You cannot deduct your mileage directly from the income. You are allowed to deduct your mileage (57-1/2 cents/mile for 2015) and other job expenses. TurboTax completes form  2106, which  then carries to Misc itemized deductions on Schedule A. The problem with this is that you only get to deduct that portion of  your misc deductions that exceed 2% of your AGI. and then only if your total  itemized deductions exceed the standard deduction.  Since your reimbursement is in after tax money, reported on your W-2 or 1099-Misc, it does not have to be entered in TT and shown on form 2106.

 In TurboTax, enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

I'll choose what I work on

-Scroll down to:

-Employment Expenses

-- Job related expenses

That's the proper way to do it. That said, some employers will issue a 1099-misc for mileage/car allowance assuming that allows the employee to take a direct deduction. So many employees do that. That will happen, in TT,  if you answer "income FOR your business for the rental of Personal Property". But TT will fill out schedule C. Since this "Business activity" is "not for profit", you may not deduct more than the 1099 amount. That is, you can't show a loss. If your expenses do exceed the 1099 amount, you could theoretically deduct the excess as an itemized deduction, but it's unlikely that you would exceed the 2% of AGI threshold.

There's a better way to do a direct deduction. Don't enter the 1099-Misc at the 1099-misc screen. Instead, type> personal property rental income, not-for-profit <in the find (search) box. Click the link "Jump to personal property rental income, not-for-profit". On the next screen, enter the 1099-misc $ in the box "Personal Property rental Income" and your mileage x $0.575 in the personal property expenses box. TurboTax will not allow you to deduct more than the 1099 amount

View solution in original post

5 Replies
Hal_Al
Level 15

I received a 1099-Misc for the use of my vehicle, it's considered a car allowance.

Who paid you and gave you the 1099-Misc and why? What box on the 1099-Misc is the $ in?
cdawg
New Member

I received a 1099-Misc for the use of my vehicle, it's considered a car allowance.

The company I work for pays me a monthly car allowance for the use of my vehicle. I receive a W-2 for my salary, but they give a 1099-MISC for the car allowance, the car allowance is $1,375 a month.
cdawg
New Member

I received a 1099-Misc for the use of my vehicle, it's considered a car allowance.

It's listed in rentals
Hal_Al
Level 15

I received a 1099-Misc for the use of my vehicle, it's considered a car allowance.

"It's listed in rentals". I assume you mean box 1.
See answer
Hal_Al
Level 15

I received a 1099-Misc for the use of my vehicle, it's considered a car allowance.

Your employer is doing it wrong. A car allowance should be added to box 1 of your W-2 as taxable income. Ideally your employer issues you a corrected W-2 and a corrected 1099-Misc showing $0.

Assuming that's not going to happen,  enter the 1099-Misc at the 1099-Misc screen, in TurboTax(TT). When asked why you got this 1099-misc, answer "nonbusiness income from the rental of personal property". You cannot deduct your mileage directly from the income. You are allowed to deduct your mileage (57-1/2 cents/mile for 2015) and other job expenses. TurboTax completes form  2106, which  then carries to Misc itemized deductions on Schedule A. The problem with this is that you only get to deduct that portion of  your misc deductions that exceed 2% of your AGI. and then only if your total  itemized deductions exceed the standard deduction.  Since your reimbursement is in after tax money, reported on your W-2 or 1099-Misc, it does not have to be entered in TT and shown on form 2106.

 In TurboTax, enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

I'll choose what I work on

-Scroll down to:

-Employment Expenses

-- Job related expenses

That's the proper way to do it. That said, some employers will issue a 1099-misc for mileage/car allowance assuming that allows the employee to take a direct deduction. So many employees do that. That will happen, in TT,  if you answer "income FOR your business for the rental of Personal Property". But TT will fill out schedule C. Since this "Business activity" is "not for profit", you may not deduct more than the 1099 amount. That is, you can't show a loss. If your expenses do exceed the 1099 amount, you could theoretically deduct the excess as an itemized deduction, but it's unlikely that you would exceed the 2% of AGI threshold.

There's a better way to do a direct deduction. Don't enter the 1099-Misc at the 1099-misc screen. Instead, type> personal property rental income, not-for-profit <in the find (search) box. Click the link "Jump to personal property rental income, not-for-profit". On the next screen, enter the 1099-misc $ in the box "Personal Property rental Income" and your mileage x $0.575 in the personal property expenses box. TurboTax will not allow you to deduct more than the 1099 amount

View solution in original post

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