What is 463 accountable car allowance?
The 463 accountable car allowance isn’t as complicated as it sounds. In fact, it’s going to make your life easier! This reimbursement plan is designed to fully reimburse drivers for every work-related mile they drive. Better yet, these reimbursements have the potential to be tax-free. Nice!
Note: Every driver's reimbursement, regardless of the reimbursement style, has to be compared to the IRS rate. If there is any overage in your reimbursement, only the overage is taxed.
463 programs offer the following reimbursement styles:
Regionally aware fixed and variable rates: You’ll receive region sensitive fixed and variable rates. This means that your reimbursement will accurately reflect the cost vehicle ownership in your region.
Note: 'Fixed' expenses add up regardless of how often you drive your car, while 'variable' expenses depend on your driving frequency and mileage. Your fixed rate reimbursements are a set amount that will not change, and your varied rate reimbursements will vary from month to month.
A simple flat rate: Your employer will select either a simple fixed rate (i.e. $500 dollars per month) or a variable rate (i.e. 55 cents per mile), to reimburse you for your business driving expenses.
Any other reimbursement method: One of the great things about the 463 program is the flexibility surrounding your company's reimbursement style. For example, your company can choose to offer a reimbursement rate in conjunction with a gas card.
The 463 accountable car allowance has two big advantages for drivers.
It saves money. Nearly every reimbursement payment is tax-free, and even when overage is taxed, 463 is still incredibly tax-efficient. This is because you only pay taxes for the overage, not the entire reimbursement.
- 463 has virtually no compliance measures. The age, cost, and insurance on your vehicle generally do not matter. Other programs are regulated by the IRS and have many compliance requirements. With 463, all you need to do is carefully follow your company’s vehicle program policy.