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Business vehicles

Drive a tax-saving bargain in your company car

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in Employee Benefits Program,Human Resources,Small Business Tax,Small Business Tax Deduction Strategies

One of the good things about owning a business is that you can give yourself some nice perks, like a company car. This Special Report explains strategies to: (1) minimize the tax hit on corporate-owned cars provided to you and other key employees and (2) maximize the tax savings for your corporation.

Rules for shareholder/employees

Let's say you run your business as a C or S corporation. You're an employee too, which means you can receive company-paid fringe benefits, such as a company car that you'll drive partly for business and partly for pleasure.

Of course, the IRS will treat you as receiving additional taxable compensation for the personal-use factor. Your added compensation would equal the amount it would cost to lease the same vehicle, multiplied by your personal-use percentage during the year. This amount shows up as extra salary on your W-2 and is subject to income and employment taxes.

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