When should the value of side trips made for personal errands while using a company vehicle be included in an employee's taxable income?
Author: Alice Gilman
If the employee's side trips occur on an infrequent basis, the value of the side trips may be excluded from his or her income as a de minimis fringe benefit. A de minimis fringe benefit is any property or service provided to an employee that has so little value (taking into account how frequently similar benefits are provided to employees) that accounting for these benefits would be unreasonable or administratively impracticable.
However, an employer must include the value of routine side trips in the employee's taxable income, since routine side trips are not, by their definition, infrequent. An employer should be able to identify routine side trips from the documentation the employee provides to substantiate his or her business use of a company vehicle.