Quote:
Originally Posted by Beccagold
I think Mileage is very important here. I drive 2000k miles/month which means about $400 for gas. Also, the method of payment matters. If the company pays an "allowance" its taxed, if its "reimbursement" its not.
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I was going to say I don't think that $1k is very far off. I worked at a job that wasn't really driving intensive, but had commutes to different clients of 100 miles per day easy - often more. I say it wasn't driving intensive because I did not drive all day from client to client - just a lot more far out clients.
We were reimbursed our total miles multiplied by the IRS mileage rate. I often received more than $1k/month in mileage reimbursements. When you factor the cost of the car, insurance, gas, repairs, etc., you can see how it adds up really fast if you have a driving intensive job (more the gas and repairs than the purchase/lease usually).
Drive 100 miles a day under a reimbursement plan and you'll get $1k/month easy. More...
I am not sure off the top of my head but I wondered if an allowance was taxable. I think if you can document your business miles and/or your business auto expenses you could take those as a deduction though on your tax return to offset the income. Something to look into. But mostly it would be preferable to set up a reimbursement plan it seems. The $1k seems like the least headache though from the choices you have been given. I think mostly it is an ease of use thing. Just a simpler way for everyone.
If you drive A LOT of miles for your car I would consider taking the company car. I only worked in my driving intensive job 1.5 years and put on about 50k miles. You go through cars REALLY fast that way. Also if they will pay for all the gas it really may come to more than the $1k in the end.
If you like to buy new cars every few years anyway than I'd take the allowance. I prefer to keep my car 10-20 years so it was quite expensive to run up so many miles on it I felt. You would definitely need to set a lot of the allowance aside for your next car purchase if you drive a lot.
If you really don't drive that much I would take the allowance. The threshhold would be around 2000 miles/month. Most employers would reimburse you $1k/month to drive that much based on current IRS mileage reimbursement rates. If you drive much less than that take the allowance and run. The rate includes insurance, gas, dmv, repairs, purchase and everything (it changes every year due to changing gas rates and such). Just as an idea as a way to quantify the benefit. Of course actual auto expenses usually are more than the mileage rate so something else to keep in mind. IT's a starting point.