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Tag: mileage rate

Top 5 Reasons to Reimburse the Full IRS Mileage Rate

Right on targetThere is no Federal law mandating the reimbursement of mileage expenses but the IRS does set a rate that employers and employees can use as a guide. This leaves a little room for confusion though. How much should an employer reimburse? While employers may have valid reasons for reimbursing more or less, I would argue that it’s better to reimburse the full rate. Here’s why:

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When Employers MUST Reimburse Employees For Mileage & Expenses

Employee accepting reimbursementThe question of whether employers must reimburse their employees for work related expenses comes up a lot. The answer is not cut and dry, however. The FLSA does not require employers to reimburse for mileage or other expenses but some states, such as California, do. It is the responsibility of the employer to be familiar with state laws.

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Gas Prices Down, Mileage Rate Up in 2015

Last year the IRS mileage rate went down slightly, despite escalating gas prices. This year the rate went up slightly, despite decreasing gas prices.

You would think, with gas prices so low, that the mileage reimbursement rate wouldn’t go up, but instead would go down, maybe even way down. But it didn’t. It went up one and a half cents per mile to 57.5 cents on January 1st, 2015.
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Should You Pay More Or Less Than the Standard Mileage Rate

The IRS Standard Mileage Rate is the rate provided by the IRS for mileage reimbursement for business use of  a personal vehicle. In 2017, the rate is 53.5 cents per mile. The rate is a guideline based on average gas prices and average wear and tear on a vehicle (gas reimbursement is a part of this rate).

Some people want to know if they can reimburse less than the standard rate. The answer is yes. Others want to know if they can reimburse more. The answer is also yes.
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Employees Can Deduct the Mileage Employers Don’t Reimburse

The purpose of the IRS Standard Mileage Rate is not to impose a rate of payment by employer to employee, but to give the employee a guide for his or her deduction at tax time.

The rate offers compensation to the employee either through payment by the employer or as a deduction for business related mileage on a personal vehicle.

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Should You Pay Mileage?

You don’t actually have to reimburse your employees for mileage expenses according to federal regulations. Of course, if you don’t, employees may not want to drive anywhere for you, because it’s expensive and it causes wear and tear on the vehicle. But if you decide, for whatever reason, that you don’t want to reimburse your employees for mileage, then rest assured, you won’t be held liable by Department of Labor for not reimbursing. (Some states have their own laws and do require reimbursement.)

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