I have a company car and have had a car allowance in the past. There are pros & cons to both.
Car Allowance:
1) Make sure that it is a "reimbursement" this means you will need to track your miles. THIS IS CRITICAL!
2) Get AT LEAST the IRS allowance deduction as your reimbursement. I believe it is $0.505 this year.
3) Choose a car that is sustainable, durable, low cost and high fuel mileage, you might want to consider some of the new Hybrids or Hybrid SUV's
Company Car:
1) Do they cover insurance: Who can drive the car? (My wife & I can dirve our company car)
2) Reporting mileage is easy, Just make sure personal use numbers come in under 10%, being creative is generally OK.
3) ALL maintenance is covered by the company, in 2 years and 4 months I have had, AC replaced twice @ $1,500 each, Steering replaced @ $1,800, Radio replaced @$800 and a tire & Wheel replaced @$1,100
4) Car washes, oil changes and anything related to the car is covered by the company.
5) I am charged $150/mo for my personal use of the vehicle. I pay tax on the $150 only.
6) The car is replaced every 60k miles, I get to choose between three different models. My next car is a Dodge Charger SXT with an MSRP of about $28k.
I generally value the Company Car at $15,000 per year or $20k pre-Tax Dollars. Be VERY careful if you are taxed on the car allowance that it does not change your tax bracket!
John
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