Here's how to create a Vehicle Allowance pay item that is a taxable fringe benefit.
Create Vehicle Allowance item
To create a Vehicle earnings type:
- In the Payroll app, choose Settings.
- Click Pay Types.
- In the Earnings table, click +Add.
- Enter "Vehicle Allowance" as the Earnings Name.
- Choose "Additional Earnings" from the Earnings Category List.
- Keep the Rate Type as Fixed Amount.
Add an After Tax Deduction for the same amount to offset the earnings.
This Vehicle Allowance pay item should be used to pay employees in advance of the cost of the vehicle. To reimburse an employee for business related vehicle expenses that have already been paid, use the Reimbursement pay item.