When personal use of company car is added to employee W-2 is that part of wages?
Employee earns $100,000 in salary, and is provided a leased company car with lease payments totaling $10,000 per year. His personal use benefit is calculated at $5,000 and added to his W-2.
1) For financial reporting purposes, is his compensation $100,000 and Leased Vehicle costs $10,000?
The personal use amount of $5,000 would be a reconciling item between W-2 and 941’s
2) Or is financial reporting of compensation $105,000 and Leased Vehicle costs $5,000?
3) Once suggested entry is
dr Compensation $5,000
cr Miscellaneous Income $5,000
For the record, I believe 1) is the right answer.
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