Is car allowance considered taxable income?

I’m in sales and just started with a new company based in the UK and they consider car allowance taxable income.

Asked on September 29, 2015 under Employment Labor Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

A dollar-for-dollar reimbursement of actual costs incurred e.g. your gas, tolls, and parking is not income. However a general car allowance is income it is extra compensation paid to you. You might in this case use it to offset car costs, but it still puts extra money in your pocket not directly linked to the reimbursement of costs you incurred on behalf of your employer.

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