It’s not too common for employers to reimburse an employee more than the IRS suggested rate but it does happen. Some employers reimburse more because they don’t feel that the IRS rate is enough. Once, an business owner told me that he didn’t know the rate so he wrote a check for $100 each week.
In either of these scenarios the employee receives more than the IRS mileage rate. While this is fine, the IRS has rules about excess mileage payments:
Any amount reimbursed over the IRS standard mileage rate is technically wages. Employees must claim this at tax time.
“If you were reimbursed for travel or transportation under an accountable plan, but at a per diem or mileage rate that exceeds the Federal rate, the excess should be included in the wages on your Form W-2.” IRS.gov
Example of Excess Mileage Calculation
As an example, if an employer chooses to pay 60 cents per mile and the employee drove 1000 miles in one year, that employee would have to claim the excess of 6 cents for every mile. So she would have to claim 6000 cents (or 60 dollars) on her taxes in addition to her regular wages.
If employers pay employees less than the standard rate, employees can deduct that amount on their taxes.
Track Mileage to Avoid Over-payments
With Timesheets.com, employees can track their mileage against the current mileage rate so that exact payments can be issued and over-payments avoided.