Company car - Is it worth using for personal use?

I would think if it means replacing the expense of owning and maintaining your own car for personal use, it's a no brainer.


If you decide to keep a personal car, different story.

If I were keeping my own "weekend" vehicle, than I'd prefer my company car to have zero tax implications for me.

I think the biggest perk of it is getting rid of a car in your household though.

The large SUV for spouse is probably the way I would go.

Curious question. Do you carry separate auto insurance or rely on the company's insurance?

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Curious question. Do you carry separate auto insurance or rely on the company's insurance?

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The company car would be insured by the company

Let's say the monthly note, gas, fuel, insurance, maintenance, etc on a car that you own is $5,000 a year.

Let's then say you are offered personal use of work car, but the personal use is going to require $5,000 a year accrue in wages.

In the first example, you are out $5,000 cash.

In the second example, you are out whatever the tax cost is of $5,000. No matter what state you are in or what kind of income you make, you are not going to be paying 100 percent of your income in tax.

Even if you were very wealthy and paid a combined federal/state/FICA/etc rate of 50% on each additional dollar, it's costing you $2,500 to use the work vehicle for personal use.

Would you rather spend $5,000 a year or $2,500 a year?

You need to find out how you are charged, but in almost all cases, for an employee, it's better to take the company car. This is of course assuming it's your only car for you.

OK, but what if you drive a friend's car. Does the company insurance still cover you?

I had company cars for over 25 years. First, make sure the company car is something you would like to drive. My last two cars were a Chevy Malibu and then a Chrysler 300. We always had American made cars for political reasons and I liked both of these. When I was younger I chose minivans because my wife and I thought it was better for travel with 3 kids.

The company car was always our most driven car. It was the first one used for any local trip or out of town trip. The only limits the company placed on its use were that I could not expense gas while I was on vacation and only 1 fill up on the weekends. I always gassed up on Friday so I usually didn't have to gas up on weekends. And, my children were not allowed to drive it. Very liberal policy.

I had to track personal miles. I kept a small calendar in the car for this purpose. It was not a major inconvenience. At the end of each quarter I had to fill out a one page form that asked for the odometer reading at the beginning of the quarter and at the end of the quarter, the number of personal miles driven and had to sign that I kept a log of personal miles. My company would estimate the value of the car based on some publication they subscribed to and the percentage of personal use mileage. That amount would appear on a future pay check. I treated it somewhat as a bonus. I was taxed at my normal tax rate. In other words if the "value" to me was $1,000 dollars it would cost me $280 based on a 28% marginal income tax bracket. My personal use usually was between 10 and 25%. I know others I worked with would claim only 1% personal use and were never questioned on it. Of course, the IRS may get curious if they audited your tax return.

My company car arrangement was a huge benefit because of my company's personal use policy. Also, we would usually get a new one every 24 to 36 months based on total mileage. A new car at least every three years meant that it was always in pretty good shape.