What is considered a fringe benefit for mileage at work?

[krw44]

My husband's employer is saying that it is a fringe benefit anytime he drives the work vehicle and will be taxed for it. They are stating this includes to/from home (even though he doesn't bring the truck home) and driving to/from the office to each job site (which can be    anywhere from 10-300+ miles one way). He isn't using it for personal use, just to get to/from job sites and pick up supplies for work only.

[Opus 17 · Accepted solution]

If he is allowed to bring the work vehicle home and use it for non-work use, that is considered a taxable benefit.

Generally, it's considered taxable if the mileage does not qualify for a tax deduction as an unreimbursed business expense.

Driving to and from home is a non-deductible commute, however, being allowed to drive the vehicle home and back is not a taxable benefit if he is on call or needs to use the vehicle to go directly from home to a job site.  And he certainly should not be taxed for any use that he does not actually make.

Driving from the office to a job site is deductible mileage, so it should not be considered a taxable fringe benefit.  Assuming that they do include it in income, you can deduct the mileage as a work expense.  However, this deduction is eliminated by the new tax law starting January 1, 2018.  The IRS will need to write the regulations to actually implement the law so there is no way to guess now how employee use of work vehicles will be treated next year.

There is also an exception for certain vehicles that, by their nature, are unlikely to be used much for personal use.  (Such as a vehicle that has been extensively modified for work or carries the company logo prominently.  My next door neighbor is an electrician who drives his bucket truck home some evenings, that won't be a taxable use because the bucket truck is unlikely to be used for more than minimal personal purposes.)

See generally publication 15-B pages 21-22.  https://www.irs.gov/pub/irs-pdf/p15b.pdf  As mentioned, these rules may change quite a bit next year.  

I suspect the employer is being over-cautious and taxing you for use that may not be taxable.  Or they are reacting t o the new tax law and assuming that, since the itemized deduction is removed, therefore all use must be taxable.

I'm not sure what other course of action you have, though.  If the employer won't wait for the new rules to be implemented, or you can't get them to talk to a different tax advisor, you may be stuck with the vehicle being taxed as income, in which case you should drive it as much as possible so your own personal vehicles don't wear out as fast.