Under IRS regulations, employees are subject to Federal and State income and withholding taxes on the value of their personal use of an employer-provided vehicle. These regulations allow employers the option not to withhold income taxes on this value. Employers are still required to include this value on the form W-2 employees will receive.
Illinois State University is electing not to withhold income taxes on the value of an employee’s personal use of an employer-provided vehicle. Illinois State University is still required to withhold employment taxes (e.g. Medicare, Old-Age Survivor Disability Insurance) if applicable.
To avoid paying additional taxes when filing their tax return, employees may wish to amend their form W-4 (withholding certificate) to provide additional withholding. Alternatively, employees may wish to make payments of estimated taxes by filing a form 1040-ES.