Company Cars & Fringe Benefits Tax in Wisconsin & Illinois
Tax Implications of a Company Car
Providing employees with company cars is considered a fringe benefit, and must be taxed accordingly. Leasing a fleet of company vehicles provides businesses and employees with different tax benefits. Following IRS guidelines on company cars will ensure businesses and employees receive appropriate tax incentives. Contact Ewald to learn more.
Fleet incentives like lower taxes and rebates are one of the many reasons businesses prefer leasing company cars vs buying. Providing employees with a fringe benefit like a company car offers lower tax costs compared to reimbursing for mileage. The larger your fleet, the greater the benefits. While you should consult your company's tax team to determine the exact benefits, virtually every business that chooses fleet leasing with Ewald over buying saves money in tax expense.
The value of the fringe benefit, in this case use of a company car, must be withheld from the employee’s paycheck and is based on the Fair Market Value (FMV) of the benefit. There are 3 ways to determine the FMV of a leased company car: