How To Calculate Mileage Expense Reimbursement

If you drive a personal car for business reasons, your employer may provide a mileage expense reimbursement. Here’s a quick explanation on how you calculate your reimbursement.

How to Calculate Mileage Expenses Reimbursement

You’ll want to keep a mileage log book of all your drives. Nowadays, companies prefer a digital mileage log like those generated by MileIQ. Make sure you’re including:

  • Dates of your drives
  • Distance of your trips
  • The business purpose of your drives
  • The potential value of these drives
  • Any additional vehicle expenses that are relevant.

To determine what your miles are worth, multiply the miles driven by the mileage rate set by your employer. For example, let’s say you drove 224 miles last month and your employer reimburses at the Standard Mileage Rate of 53.5 cents per business mile. Your mileage reimbursement would be $119.84 (224 X 53.5 cents = 119.84).

MileIQ For Tax Professionals: Work Mileage Solved

Does My Company Have To Provide A Mileage Expense

There is no federal law requiring a mileage reimbursement. But, many companies offer this to keep employees happy.

States like California do require companies to provide some compensation for the business use of their vehicles. In California, this can be a car allowance or a mileage reimbursement.

Are Reimbursed Mileage Expenses Taxable Income?

If your business has an “accountable” plan, the employer doesn’t have to include these costs as part of taxable wages. The “accountable” plan must meet the following conditions:

  • Connected to the Business: The employee must have incurred the expenses in relation to their business services.
  • Substantiation: The employee must provide documentation of these expenses. For mileage reimbursements, this is often a mileage log
  • Return Excess Amount: Employees must return any excess amounts in a reasonable amount of time.

MileIQ For Tax Professionals: Work Mileage Solved

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