Updated: October 2012
For tax year 2012, the personal use of an employer-provided automobile continues to be taxable income. For federal tax reporting, there are two methods of determining the value of that benefit: the "commuting use" and the "annual lease value" methods. The "commuting use" can only be used if all vehicles are used 100% for business; no personal use. Since this restriction precludes JMU, the annual lease valuation method is used for determining taxable income.
Under the annual lease valuation method, the lease value of the automobile is considered to be income to the employee. The IRS requirement for documentation of business use includes maintenance of a diary or log which records the following elements:
The Automobile Use Form and your submitted travel reimbursement vouchers should serve to meet these requirements. It is essential that these records be properly maintained. Automobile use forms should be submitted to Payroll Services by November 9, 2012. Employees leaving University employment should submit their forms as soon as practical, after returning the automobile. Failure to submit the mileage log will create the presumption that all mileage was personal and 100% of the lease value of the automobile will be reported as taxable income on your W-2 form.
Additionally, the University has elected not to withhold federal taxes on income resulting from the personal use of these vehicles. This election is effective for the special reporting period November 1, 2011 - October 31, 2012 and continues until revoked by the University. Applicable income will be recorded on your 2012 W-2 statement and applicable FICA and state taxes will be deducted from your December 14, 2012 paycheck.
Should you have any question concerning this policy, please contact Sherry Willis (540.568.8034) in Payroll Services.