If your company owns vehicles that are used by employees for personal purposes, it is generally a taxable fringe benefit and must be reported on the employee’s W2. This amount is subject to income and employment taxes.
What is personal use?
Personal use of a company vehicle includes the following:
1)Any trip that is part of the employee’s regular commute – which is the travel from home
to work and work to home
2)Any trip unrelated to the business, or any trip without a business purpose
3)Any use of the vehicle on the employee’s days off or vacation
4)Any use of the vehicle by someone other than the employee
How to calculate the taxable benefit of personal use:
There are two primary options for calculating the taxable benefit of personal auto use.