Employee must be charged with $1,000.00 taxable car allowance for a tax year. The $1,000.00 will be charged in one lump sum to the employee.
1. If you don’t have one, in Standard Rate Code Maintenance, setup a Rate Code called CAR as a Miscellaneous Pay Type.
2. If you don’t have one, setup a Deduction called CAR in Fringe/Deduction Maintenance. Make all flags for federal and state(s) Yes. If you feel the Car Allowance is not susceptible to FICA, FUTA, SUTA, or Worker’s Comp, please discuss that with your accountant.
3. In Employee Deduct/Fringe Maint. assign the CAR Deduction to the employee with a Fixed Dollar Amount of $1,000.00.
4. During the entry of an employees’ weekly TimeCard, add a Line, using the Rate Code CAR, for $1,000.00.
Note: the employee will be ‘charged’ with $1,000.00 because of the Miscellaneous Pay and the $1,000.00 will then be ‘deducted’ out because of the Fringe/Deduction. As a result the employee gets taxed for the Car Allowance.
5. If Car Allowance is to appear in a special box of the W2, you will have to put that amount manually in that special box in the W2 under Adjust Empl. Year End Earnings. The Gross Wages will already reflect the $1,000.00.