Calculating mileage reimbursement starts by knowing when you actually need to reimburse your employees. Although many employers think that they have to pay for mileage , the federal Government does not require you to reimburse employees. However, there are certain states that have regulations. California, for instance, requires employers to reimburse employees for any losses incurred while completing work duties.
The IRS sets the mileage reimbursement rate for employees who drive their own Privately Owned Vehicles (POV), but this rate is a guideline for employers and a tax deduction opportunity for employees. You can choose whether or not you want to pay your employees more or less than the IRS rate. Also, keep in mind that you have to follow your state’s reimbursement regulations as well. In Addition to that, under FLSA regulation, you must pay your employees the standard minimum wage. If their expenses lead them to an hourly rate below minimum wage, you will have to assist them with the cost.
The IRS has a guideline for reimbursable and non reimbursable expenses when an employee uses their own POV for business duties. Here are some reimbursable and non reimbursable expenses: