I receive a monthly car allowance from my employer, how do I handle the taxes?

My employer gives me a monthly car allowance per month that is not taxed. It is enough to cover the car payment and insurance. I drive the vehicle 70% of the time for the company. How will this impact me and how handle this at tax time? Thanks.
I receive a monthly car allowance from my employer, how do I handle the taxes?
Your employer will combine the amount of the allowance paid to you under a non-accountable plan with your wages, salary, or other pay. Your employer will report the total in box 1 of your Form W-2.



If you want to claim the expenses, you must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Your meal and entertainment expenses will be subject to the 50% limit. Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions.
I receive a monthly car allowance from my employer, how do I handle the taxes?
It should be counted as income.
The allowance is income. It is offset by relevant expenses; the easiest way to proceed is to keep a logbook of all use, personal or business, and add up the business use at the end of the year. The IRS publishes a deductible amount per mile, which is presently about forty cents.
You will need to keep track of at least the mileage and preferably the other costs as well (gas, oil, tires, coolant, insurance, interest, etc.) At the end of the year, the allowance should be reported to the IRS and claimed as income offset by either your expenses or the standard mileage rate.
These allowances are taxable income. I have one, too.
You should claim it as income. It should be added to your wages on your W-2 statement. You can deduct mileage or 70% of the actual expenses for the year. The mileage amount is $.48 for 2007 ( I think).