How should this be handled, 1099? For example, allowance of $400. Mileage deduction comes up to $300 of the granted $400 allowance.

"The unaccountable portion is subject to income tax withholding & employment tax"

Does that mean that a 1099 would need to be made for the $100 per month, or $1200 over the year, (assuming same every month) in addition to the normal W-2?

If it's an employee, it needs to go on the W-2. You shouldn't have a 1099 and a W-2 for an employee.

What OldArmyBrent said is correct. Your employer should have put the income in your W-2 and subjected it to social security and income tax withholding. I would guess they did not (or will not). Very few employers do this like it is supposed to be done, at least in my experience.

What kind of liability is there for the employee if the employer does not handle it on the W-2 as mentioned?

Just noticing an issue with my auto allowance. It appears our company paid a net amount of $xxx per month which is the correct after tax amount but it is in the gross section
However, this is a gross amount on my paystubs. So am I leaving money on the table? In other words:. Shouldn't it be gross pay, gross auto allowance, then taxes taken out? As it is, my paystub is showing gross pay, net auto allowance, and then taxes. Looks like I'm getting screwed.

Thoughts?