Reporting Personal Use of Company Cars on W-2s

If your business owns vehicles used by an owner, employee or company director, you need to determine if you have a personal-use payroll reporting requirement.  Generally, nonbusiness use of a company vehicle is taxable compensation to the employee which is subject to payroll taxes.  Therefore, you need to include this in your payroll processing before your deadline for making a timely tax deposit for 2011 passes.

Since this payroll reporting must be done before the end of the year, November and December usage can be reported next year.

For your convenience, we have the 2011 Worksheet and the  IRS Annual Lease Value Table available for your use in calculating the benefit to be included in your payroll reporting. 

In order to have the employee cover the employee's share of the payroll taxes, this compensation needs to be reported when you are processing a payroll with wages.

If you miss reporting the taxable benefit with a payroll run, you will need to gross up the taxable benefit to include the employee's share of the payroll taxes resulting in a net zero check.

For those of you using a payroll service, please contact your payroll representative regarding this taxable benefit and any others that need to be included in your year-end reporting.  If you need a payroll-service referral, we would be happy to help you make that connection.  Or if you prefer, we will be happy to assist you with this reporting requirement for those of you with do-it-yourself payrolls.