Travel and Entertainment Expenses

 

 2.  The company offers employees who live 25 miles from the office a $50 monthly car allowance.  The allowance is taxed, one-half every semimonthly pay period.  Employees who drive their own cars on business receive a mileage allowance of 48 cents per mile, which isn't taxable or included on their pay stubs.  Is this OK?

 

Yes, the company is treating both allowances properly.  The $50 monthly allowance is taxable.  To help employees understand why their taxable wages are more than their cash pay, it's a good idea to include the allowances on their pay stubs.  Mileage reimbursements aren't taxable, provided employees account to you for the time, place, and business purpose of their trips.  Since they're not taxable, you don't have to include them on employees' pay stubs.

 

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