How do I show my entire income when my company writes off vehicle allowance on the back end?
I am trying to get a mortgage but I keep getting turned down because of the way my company pays us. I am a courier driver and I use my own vehicle for work. We are employees (not independent contractors). Every day, we have to enter starting and ending mileage. At the end of the week, they take our total miles and calculate the vehicle allowance of $0.545 per mile. If I drive 1500 miles, that would come out to $817.50. If I gross $1000 for the week, they deduct the $817.50 from the gross, which leaves me with $182.50. That is the amount they tax us on via a W2 form. I am then paid the entire 817.50 plus what is left over from the taxed $182.50, which usually comes out to be about $950, give or take. The problem is, the amount that they are deducting as a vehicle allowance is never itemized anywhere, nor documented for the employees anywhere. It basically doesn t exist other than on our pay stubs and our checks/direct deposits. Mortgage lenders will only use what my W2 shows, which is usually less than $10,000 a year, even though I make over $50,000. Is there some way to show my entire gross income on my taxes in this scenario? I ve used 3 CPAs and none of them have ever seen anything like this so they don t know what to do other than file the W2 as is.
- SlickterpLv 79 months ago
So you get paid by the mile essentially? That sounds like a giant rip off in the first place.
Think here... you gross $1000. They then take out the mileage money (does this make sense?, they take out something that is not part of your gross pay in the first place). Then they tax the leftover amount, and then give you the mileage.... which means that you are getting paid the mileage, but then only actually grossing $200 for the week. Do you see the ripoff here? They should be taxing the $100 AND paying you the mileage on top.
- Max HooplaLv 79 months ago
The delivery allowance is based on the value of the miles you drive. Your gross wage after deducting mileage allowance is analogous to the profit you would show if you were an independent contractor. Another way of stating this is that you are being screwed. A decent employer would pay you an hourly wage plus mileage reimbursement.
- Anonymous9 months ago
I am having trouble visualizing this.
You get paid a fee for deliveries, but that includes the wear and tear on your car. Rather than leave you with a non-deductible mileage expense, the company reduces your pay by the same amount, saving themselves the cost of matching FICA and MEDICARE.
When you divide the amount you did get by the number of hours worked, is it at least minimum wage? If not, get labor departments involved!
Unfortunately, for your underlying question, the mortgage underwriters are being realistic. You made $10k AFTER expenses. You are trading the economic life of your car for cash.
- EvaLv 79 months ago
Your employer is ripping you off. They should not be subtracting your mileage allowance from your pay! They are correct in that they aren't taxing your mileage allowance since you account for your mileage, but you should be making more than $182.50. How many hours are you working? They have to pay you AT LEAST minimum wage for the hours you work PLUS the mileage allowance. It should show on your pay stubs that way and they should also enter the amount of the mileage allowance in Box 14 of your W2 (they don't have to, but they should). No bank will count the full mileage allowance as income because you also have expenses incurred to get that - gas, repairs, insurance, car payment, etc. You could try showing them your pay stubs, but you may still find it difficult. Your CPA's are correct. They can only file what's on your W2. The labor dept. might have an issue with the way they are figuring your pay.
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- STEVEN FLv 79 months ago
If they are properly completing your pay statement, it EXPLICITLY shows the mileage allowance.
In addition, they CAN'T charge you for using your own vehicle for company business as you claim. Your fiction skills are not up to 2nd grade.