The experience of driving a company car has always been a much sought-after perk by many employers and employees. It can provide a status-enhancing car at a low tax cost and generate tax deductions for companies of all sizes. Personal use of company cars is a common industry practice with many companies purchasing or leasing vehicles which are used by employees in the course of doing business, and having the use of a company vehicle has been an extremely popular fringe benefit for the company owner or key employees for many years.
When your company provides you with a leased vehicle to be used for business purposes, the IRS views this as a business expense for your employer. They also view the personal use of this vehicle as a taxable fringe benefit to you, which must be calculated and reported every year. Providing a company car does require some specific record keeping, and tracking of personal use vs. business use. Personal use of a company vehicle must be tracked and valued under the fringe benefit tax rules and treated as compensation income. IRS Publications 15-B and 463 define what is expected. As an employee driving a company car, the personal use value will appear on your W-2 form and is treated as salary on your 1040 at tax time. As a general rule, the personal use of any vehicle results in compensation income.
Buying your company car is a great way to get a fabulous deal on a vehicle you are already familiar with. Give us a call at (866) 683-5505 and ask us about our company car finance options or fill out our credit application . We have relationships with banks, financial institutions and credit unions that enable us to help you find the best loan for your situation, making it simple, easy, and affordable to buy your company car or fleet vehicle.