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Tax Law (Questions About Taxes)/Employer-provided Vehicles

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Question
Hello,
I have a different scenario for employer-provided vehicles.  Our company provides, leases and pays up to a maximum amount of $1,000.00 per month to have an employee lease a company vehicle.  Again, let me reiterate, our company pays for the lease amount per month instead of having the employee pay for the lease amount.  But, anything in excess of $1,000.00 it now becomes the employee's responsibility to pay this excess amount.  Therefore, the company wants the excess amount to be deducted from the employee's check as a deduction.

Is this the correct way to process something like this? I have read the IRS guidelines in calculating personal use of mileage either using the "Cents-Per-Mile Rule" or the "Commuting Rule" or "Annual Value Rule" and it will be applied accordingly.  However, the "excess amount" is what I am struggling with.

Any help or guidelines is appreciated.

Thank you,
Leona

Answer
The company is leasing the vehicle, or the company is willing to pay up to $1000 per month for an employee to lease a vehicle personally?

If the employee is leasing personally, then the employer has no cause/reason/authority to withhold any salary to make the payment.

If the company is leasing the vehicle and allows the employee to choose the vehicle, even if the chosen vehicle payment is greater than the agreed amount then the company could withhold the excess if that is the agreement.

Tax Law (Questions About Taxes)

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Richard Fritzler

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Specializing in Business and Corporate taxation. Comparing the advantages and requirements of different business entities, such as Sub-S Corporations, LLC`s, Partnerships (Both Limited and General), Doing Business as a Sole Proprietor, or Using a C-Corporation. Issues regarding K-1 distributions, 1040, schedule C, 1120, 1120s. Are you considering domiciling a Corporation in a low tax state? I can review the benefits and misinformation that exists.

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I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

Organizations
National Small Business Owners Association.
Publications
Contributing author to "The Corporate Standard Newsletter".


Publications
Contributing author to "The Corporate Standard Newsletter".
Ezinearticles.com articlesbase.com

Education/Credentials
I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

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