There’s not a whole lot to report with the mileage rate this year. It is up 1 cent from last year. Update your records for reimbursement calculations. If you track expenses with Timesheets.com, update the rate field in the company settings.
Category: Mileage & Expenses
Expense tracking serves a couple of important business needs. One, it is used to calculate reimbursable expenses for employees. And two, it complements billing and job costing for customers. This last one is important because it helps business owners make better business decisions.
Any business whose employees make company purchases is already familiar with tracking expenses for employee reimbursement. But expenses that aren’t made with employee funds should be tracked for billing and job costing too. This helps improve visibility into the real cost of projects, beyond just the cost of payroll.
Unless you want to give money away to the IRS, expense reimbursements shouldn’t be taxed. When employees pay for expenses out of their pocket, they use their taxed income and so taxing the reimbursements for those expenses is like double taxing that money. You don’t want to do that. Your employees definitely don’t want you to do that.
You’ve seen the mileage reimbursement rate that the IRS publishes each January but do you know where the number comes from? Many people think the rate is based on gas prices alone but if that were the case, mileage reimbursement would be much lower than the published rate. If your car gets 27 miles to the gallon, for example, then rather than reimbursing 54 cents per mile, you’d be reimbursing more like 10 cents!
Actually, the reimbursement rate per mile is figured from various factors associated with owning, driving, and maintaining a vehicle.
Whether employees need to be paid for travel time and mileage simultaneously when they drive their cars for work is an often confused topic. The question is:
“If I am reimbursing for mileage, do I still have to pay an hourly rate for travel time?” Or vise versa.
The answer is simple. Allow me to explain.