J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Reimbursement Arrangements

If your employer reimburses you for the business use of your car, you may or may not need to claim deductions. The answer depends on the reimbursement arrangement with your employer.

Accountable Plan

If your employer maintains an arrangement that reimburses you for business-related use of the car, requires you to adequately account to the employer for these expenses, and also requires you to return within a reasonable time any advances or reimbursements in excess of these expenses, then the plan is treated as an accountable plan. (For details on adequate accounting under accountable plans and returning excess amounts within a reasonable time, see Chapter 8.) If your employer maintains an accountable plan for reimbursement of business expenses and the amount of reimbursement does not exceed the standard mileage allowance, the reimbursements are not reported on your W-2 and you do not deduct any expenses. If the reimbursements exceed the standard mileage allowance, only the excess over the standard mileage allowance is included on your W-2. You may then deduct your actual expenses that exceed the standard mileage rate.

Nonaccountable Plan

Your employer must include on your W-2 form all reimbursements made under a nonaccountable plan.