If an employer provides a vehicle that is used by an employee exclusively for business purposes and the substantiation requirements are met, there are no tax consequences or reporting required for that use. The use is treated as a working condition fringe benefit. Business use does not include commuting. Employees should maintain records to substantiate that all vehicle use was for business.
If an employer-provided vehicle is used for both business and personal purposes, substantiated business use is not taxable to the employee. Personal use is taxable to the employee as wages.
What is Personal
The following are examples of taxable personal use of an employer-provided vehicle:
- Commuting between residence and work station, vacation travel, non-business weekend use, or use by a spouse or dependents.
Personal use of an employer’s vehicle that does not qualify for an exclusion creates taxable wages to the employee. There are three automobile valuation rules are: (1) Automobile Lease Valuation Rule. (2) Vehicle Cents-Per-Mile Rule or (3) Commuting Rule.
If you have an employer provided vehicle, the Payroll Manager will work with you in determining your taxable reportable income.
Meal expenses not involving an overnight stay are generally not reimbursable. Reimbursement may be allowed if documentation supporting the reimbursement clearly establishes that the meal is taken during overtime work periods. Please see the Travel Office website for additional information on Overtime Meals. [http://www.wm.edu/offices/financialoperations/travel/meals/index.php#mie6].
Reimbursements for Overtime Meals are taxable. A copy of the employee Travel Expense Reimbursement Voucher (TERV) will be sent to the Payroll Office. The Payroll Office then processes the entry in Banner to reflect the taxable income paid to the employee.
The method for handling federal taxation and reporting of a payment of wages to an employee who has died depends on when the wages are paid in relation to the employee’s death.
In compliance with Code of Virginia 64.132.3, when there is no executor or administrator and the gross amount is $25,000 or less the agency must wait 60 days before processing the payment to any successor. If the amount due is more you need to contact the Assistant Attorney General for guidance.
Wages paid to a deceased employee’s estate or executor /administrator after the employee dies but in the year of death are not subject to federal income tax withholding. However, they are subject to Social Security, Medicare, and Federal Unemployment Tax Act FUTA taxes. (Note: Virginia wages are exempt from FUTA taxes.) Therefore, the agency must report the Social Security and Medicare wages and the amounts withheld on the deceased employee’s Form W-2 in Boxes 3 - 6. The amount of Federal and State taxable income will be reported only on a Form 1099 – MISC in the name of the executor/administrator or beneficiary.
Wages paid to a deceased employee’s estate or executor/administrator after the year of the employee’s death are not subject to federal income tax withholding or Social Security, Medicare, or FUTA taxes and will be reported only on a Form 1099 - MISC in the name of the beneficiary of the payment.