I am employed and get a normal W-2, but I also get a monthly vehicle allowance, and I get a 1099-NEC for that.
I've struggled with this on turbo tax, as it's treating it as self employed income, which ends up in this rabbit hole of questions I have to go through. It's asking me what type of work I do, if I paid any subcontractors, business name, business code, method of accounting, etc etc.. It just doesn't seem this is the correct way to do this.

Is there an easier way to do this? It's not self employment income, it's money to go towards a vehicle, in addition to my salary.

FWIW, it's $9k a year, and it is not taxed when given to me. Once a month, my paystub shows an 'adjustment to net' of $750.

Sorry, I can't read. Ours all go on the w2 but we have an accountable plan. I assume you don't keep track of mileage personal vs non?

Sorry, but yes it is self employed income.

Fortunately, you can take your vehicle expenses (business portion) either using the mileage rate, or, if over 50% business use, you can even depreciate your car and take your actual vehicle expenses (prorated to exclude personal use, of course).

Good luck!

Sounds like you need to have your company change the policy or you need a CPA. You have to pay taxes on any 1099's received over some amount (used to be $600 I think?). Your company is just skirting around having to do the taxes on their end and putting the burden on you. Either way the allowance is taxable.

Corps_Ag12 said:

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Sounds like you need to have your company change the policy or you need a CPA. You have to pay taxes on any 1099's received over some amount (used to be $600 I think?). Your company is just skirting around having to do the taxes on their end and putting the burden on you. Either way the allowance is taxable.

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I understand that part of it. I'm not trying to not pay taxes on it (my personal portion of it, of course some of my miles are deductible)

My issue is in turbo tax with all the self employment questions. A large majority of them don't apply to me., and it just seems like what I'm doing isn't the right way to do it.

I've distributed 1099s for the past 20 years at various companies and we've never sent any to our own employees. You employer should be withholding taxes or have a mileage program such as Wheels or Motus.

Interesting.

My company has been doing it this way for ~20 years, before then they had company cars.

62strat said:

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Interesting.

My company has been doing it this way for ~20 years, before then they had company cars.

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It isn't all that uncommon. Quite a few companies have no idea about many of the rules and just do what they did last year. Year after year. Another situation that happens a lot is payments made to construction folks, particularly pipeline workers. Take a guy with 15 years experience and probably worth $125,000 per year (for example). He gets per diem for working out of town which is fine. But some employers push the envelope. Rather than pay the $125,000 and hand him a W-2 with that on it, they pay the guy $15 per hour, then in addition to the per diem pay him $75 per day to have his side by side at work, $50 a day for having his low boy trailer, so much per day for having his laptop, cell phone, pickup, and several other items. Still gets his $125,000 a year, but he gets a W-2 for $30 something thousand and the rest of it doesn't get reported to him at all. Downside is when trying to borrow money for a house with his W-2 income being what it is.

gigemhilo said:

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Sorry, but yes it is self employed income.

Fortunately, you can take your vehicle expenses (business portion) either using the mileage rate, or, if over 50% business use, you can even depreciate your car and take your actual vehicle expenses (prorated to exclude personal use, of course).

Good luck!

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And insurance.

gigemhilo said:

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Sorry, but yes it is self employed income.

Fortunately, you can take your vehicle expenses (business portion) either using the mileage rate, or, if over 50% business use, you can even depreciate your car and take your actual vehicle expenses (prorated to exclude personal use, of course).

Good luck!

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Don't keep up with it any more, but I think you can still depreciate the vehicle if less than 50% business use, but have to use straight line depreciation.

If the amounts are significant, and they likely are not, and the IRS unravels the auto allowance situation and forces the employer to revise the W-2s, then the Schedule C deductions go away and you can't take them as employee business expenses. Odds are extremely small though.

General rule is that employees should not receive a 1099 from a company that they also receive a W-2. Your employer should amend your W-2 but if this is not going happen, I would report it on Schedule 1 and back out the business portion that you can justify using the two mileage rates for the year. I would not report on Schedule C because you are not in a trade or business. How this would all work in TT? No idea!

As previously stated, the employer allowance for business use of personal auto should have been included on his W-2, and is taxable to the employee. Because it is an allowance and not an accountable plan, his business miles weren't reported to the employer and that is why this is taxable. However, because he is an employee, his business miles are considered unreimbursed employee expenses, and unreimbursed employee expenses are NOT deductible.

I think the employer is doing this incorrectly in order to allow you to deduct your business mileage against the income. You are not self-employed. However, you can report 1099-NEC on schedule C and then report as an expense, your business mileage (and any other unreimbursed employee expenses). This is not correct. If you are audited, it will likely be disallowed. This is the only reason, however, that I can figure your employer, prepared a 1099 instead of including it on your W-2. Unless they're just ignorant.

Do you work for a large company or a small mom and pop company? You might go to them and tell them that your CPA has told you that this income should've been included on your W-2. Note, the way they've prepared it is actually costing you an extra 7.5% in tax… the employer share of employment taxes.

I work for a general contractor that's been around 60 years. Private, 50-60 employees, and $200m a year.

That's interesting. I'm not the only one getting the allowance, so I'm not sure what others do. However I am the only employee getting it that isn't a PM or a superintendent , except for my boss (the CEO), and the other estimator (who is a partner).

https://www.irs.gov/publications/p463

See Table 6.1.

I am assuming that your employer provides you a car allowance and you do not provide them with any documentation regarding your business miles. This is called unaccountable plan. The reimbursement amount should be reported on form W-2 in box one.