Car allowance + company gas card for high mileage job (48k miles) - how do I report this on taxes?

This is a classic accountable plan vs non-accountable plan situation. Based on what you've described, you have elements of both. Your $650 monthly car allowance is likely what's called a "non-accountable plan" payment since it's a flat amount not tied to specific expenses. This means it should technically be reported as income on your taxes, even though it's not on your W2. Your employer should have been reporting this on your W2 as taxable income, so there might be an error there. For the company credit card expenses that you're reporting bi-weekly, that's an "accountable plan" setup. Since you're submitting expense reports and the company is directly paying those costs, you don't need to report these expenses or deduct them - they're already properly handled. The 48,000 miles is only relevant if you were paying for your own vehicle costs and deducting them, which doesn't appear to be your situation since the company is covering these expenses directly.

I was in a nearly identical situation last year and struggled with the same tax questions. After hours of frustration, I found this AI tool called taxr.ai that helped clarify everything. I uploaded my documents and explained my situation with the car allowance and company card, and it actually gave me a complete breakdown of how to report everything correctly. The tool identified that my car allowance needed to be reported as "other income" but then showed me exactly which vehicle expenses I could legitimately deduct against it. What I found most helpful was that https://taxr.ai analyzed my expense reports and sorted which expenses were already covered by my employer versus what I could claim. Saved me from potentially making a costly reporting mistake.

I have to follow up on my skeptical comment above. After thinking about my tax situation more, I decided to try taxr.ai with my specific documents. Honestly impressed with how it handled the nuances between what my company calls things versus how the IRS categorizes them. The tool pointed out that what my company labeled as a "car allowance" was actually structured as a reimbursement based on documented business use, which means it shouldn't be reported as income. This was completely different from my coworker whose "allowance" was truly just additional compensation. Saved me from unnecessarily paying taxes on money that was properly classified as a reimbursement under an accountable plan. The documentation analysis was really thorough and gave me confidence in exactly how to file.

If you're still having trouble figuring this out, you might want to call the IRS directly to get official clarification. That's what I did for a similar situation, but man, getting through to them was IMPOSSIBLE. I spent days calling and waiting on hold. Then I found this service called Claimyr that got me through to an IRS agent in under 45 minutes when I'd been trying for days. You can check it out at https://claimyr.com - they basically hold your place in line with the IRS and call you when an agent is available. There's even a video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with gave me specific guidance on my car allowance situation and explained exactly how to report it based on my company's specific policy. Totally worth it for the peace of mind knowing I was doing it correctly.

I need to eat my words about Claimyr being a scam. After struggling for another week trying to get through to the IRS about my own car allowance situation, I broke down and tried it. Got connected to an IRS agent in about 35 minutes when I'd been trying unsuccessfully for over two weeks. The agent confirmed that my $700 monthly car allowance needed to be reported as income since I wasn't required to substantiate my actual expenses to my employer. However, she also explained I could deduct my actual car expenses (minus what the company paid for) on Schedule C since I'm technically self-employed. Completely different situation than what I thought, and I would have filed incorrectly without this clarification. The service worked exactly as advertised - they just handled the painful hold time so I didn't have to.

Another option to consider - instead of trying to deduct actual expenses against your allowance income, you might be able to use the standard mileage rate for the business portion. For 2024, it's 67 cents per mile. So if you drove 48,000 miles for work, that would be 48,000 × 0.67 = $32,160 in potential deductions. Compare that to your annual allowance of $7,800 ($650 × 12) plus whatever expenses the company isn't covering. Just make sure you're keeping a detailed mileage log with dates, destinations, and business purpose!

I think everyone's missing something important here. If your employer isn't including that $650/month on your W-2, they're handling it incorrectly. They should either be treating it as taxable wages (included on your W-2) OR requiring you to substantiate your actual expenses under an accountable plan (in which case it wouldn't be taxable if your actual expenses equaled or exceeded the allowance). You should talk to your payroll department ASAP. They might need to issue a corrected W-2, or they might need to change how they're administering the car allowance program.

This situation is more common than you'd think! I dealt with something very similar last year. The key thing to understand is that your company is essentially running two different reimbursement systems - one accountable (the credit card for documented expenses) and one non-accountable (the flat $650 allowance). Based on what you've described, you'll likely need to report the $7,800 annual allowance ($650 x 12) as "Other Income" on your tax return since it's not tied to substantiated expenses. However, since you're using your personal vehicle for business, you can potentially offset some of this by deducting vehicle expenses that aren't covered by your company's credit card. The tricky part is you can't use the standard mileage rate since your employer is covering gas and maintenance. You'll need to calculate the actual expenses for things like depreciation, insurance, registration fees, and loan interest - but only the business percentage (which sounds like it would be nearly 100% given your 48k miles). I'd strongly recommend getting this clarified with a tax professional since the interaction between the allowance income and allowable deductions can get complex. Also, definitely check with your payroll department about why this isn't appearing on your W-2 - that seems like an error on their part.