Tax Reporting on Personal Use of State Motor Vehicles

The personal use of state owned or leased vehicles is considered a non-cash fringe benefit subject to reporting and taxes.  Under provisions of the Internal Revenue Code, the State of Maryland elects to not withhold Federal or State income tax on this fringe benefit. FICA (Social Security and Medicare) taxes are withheld from employees who are FICA taxable.

This year the reportable taxing period covers November 1, 2007 through October 31, 2008.  The Fleet Management division of the Department of Budget and Management will submit the employees' Auto Fringe Value forms to the Central Payroll Bureau during the months of November and December 2008.  Upon receipt, the fair market value of the fringe benefit will be added to the employee's Federal, State, and FICA taxable earnings; and FICA tax, where applicable, will be deducted from the current pay.  These amounts will be reflected in the employee's earnings statement and on the annual Wage and Tax Statement (Form W-2).

Employees who anticipate taxable income due to this fringe value reporting and are concerned about adequate Federal and State wtihholding taxes can, in lieu of filing estimated tax payments, increase their withholding by adjusting their form W-4/MW-507.  That form can be downloaded from this web site or may be submitted electronically via use of POSC.