A client has made a last-minute call demanding for a meeting with the boss immediately. If this meeting does not take place, a key account could be lost. The boss is unable to attend and asks a staff member to make sure they get there. Since there Is no time to waste, the employee gets into their car, drive to the meeting and seal the deal. There is just one challenge. The employee is out of pocket as they used their own car and incurred a fuel cost. Furthermore, there may have been other expenses incurred such as parking and simple maintenance. When the company requires the use of employee mileage, then the cost needs to be catered for. This is where mileage reimbursement for employees comes in,

Mileage reimbursement allows for proper accountability as well as control of transportation expenses. Tracking these expenses is important as there may attract tax implications in the future. Mileage reimbursement rules are outlined by the IRS to guide the way employees should be handled. There are standard mileage rates that an employee can claim. These include the following: –

• 5 cents per mile should the trip be for business purposes.
• 14 cents per mile should the trip be for charitable organisations
• 17 cents per mile should the trip be for moving or medical services

For example, if an employee travels for 100 miles, they will be able to request for a reimbursement worth $57.50 for a business trip.

When exploring how mileage reimbursement works, it becomes clear that in some instances, the company does not give a reimbursement directly. Employees now have options to explore if they are not reimbursed by the company. New mileage reimbursement rules allow for employees to make claims on their taxes. These reimbursements take into consideration parking, car insurance as well as maintenance cost. The current amount that can be deducted per mile drive for the company is 57.5 cents.

Mileage reimbursement for different business

Corporate mileage reimbursement seems to refer to large companies, however, small companies also have needs when it comes to reimbursement. With a small business, the process is slightly different. There are two options, the first being deducting the actual expense and the second making use of the standard mileage deduction rate. To ensure there is accuracy and accountability, it is important that a log is maintained for accurate tracking. This can further be supported with invoices and receipts.

Employers can choose to reimburse either above or below the federal guidelines that are outlined by the IRS. They can also expand the reimbursement to include additional costs such as maintenance and parking. However, as the employee, it is essential to be cautious. A higher reimbursement may sound like a good idea, until the IRS finds out. Depending on how much higher the rate is, an employee may find that they need to pay additional income tax. Training needs to be provided to employees by the company to ensure that this allowance is not abused.