Keiths Member Posts: 1 Newcomer
edited November 2023 in General

I am currently a full time employee and I receive a W2 every year from my employer. My employer gives me a once a month car allowance but at the end of the year they also send me a 1099 for that car allowance. Is that legal to do?


  • doradus
    doradus Member Posts: 1 Newcomer

    Hi Keiths. I presume this is a 1099-MISC that your employer sent you and that the car allowance does not show up on your W-2. Basically, any non-employment benefit in excess of $600 per tax year can throw off a 1099. In my experience, some employers handle the "side" benefits on your W-2, some with a 1099. It is legal and it is NOT considered earned income (for IRA purposes, for example). It is taxable income.