How to Calculate Your Mileage for Reimbursement

calculate mileage for reimbursement

Calculating your mileage reimbursement is not a particularly difficult process. In this short read, we’re going to show you how to easily calculate your mileage reimbursement.

With that said, your employer may use a different mileage rate than the standard IRS rate. As discussed in our previous article, if you are reimbursed for more than the IRS rate, it will be considered income and will be taxed as such.

How Businesses Use The IRS Standard Mileage Rate To Calculate Reimbursements

There are two major scenarios that company owners should think about regarding mileage reimbursement. It all comes down to whether your employees are using their personal vehicles or a vehicle provided by the company.

Let’s say an employee drove 200 miles for business using their personal vehicle. In this scenario, let’s also assume the company is using the standard IRS mileage rate.

Below is a simple reimbursement calculation using the standard IRS mileage rate:

  • reimbursement amount = miles * rate
  • $117.00 = 200 miles * 58.5 cents
calculate mileage with irs regulations

Now let’s say your employee uses a vehicle provided by your company and they drove the same 200 miles. Since the employee does not need to worry about the vehicle’s depreciation, you wouldn’t use the IRS standard mileage rate here.

Here, it’s up to your company to decide what you feel is fair to reimburse. Let’s say your company set the rate at 25 cents per mile. You would use the same equation, but the total reimbursement will be different.

  • reimbursement amount = miles * rate
  • $50 = 200 miles * 25 cents

If you drive your personal vehicle for work, you will be reimbursed more. With that said, this comes with the trade-off of more wear and tear on your car.

Note: the standard IRS mileage rate is not the only option for reimbursement. Companies can implement, for example, a fixed and variable rate (FAVR) plan as well.

Calculating Your Reimbursement When Using Your Vehicle For Both Business and Personal Use

If you use your vehicle for both business and personal use, it will be important to differentiate the mileage accumulated. This makes it easier to know what to claim for depreciation and other costs related to operating your vehicle.

Let’s say that you’ve driven your car 300 miles for personal reasons (commutes, etc.) within a given period. Within that same time frame, let’s say you also drove a total of 100 miles for business purposes using the same vehicle. In this example, you have driven for 400 total miles.

Calculating Business vs. Personal Mileage

You can calculate the percentage of how many business miles you’ve driven by dividing the business miles by the total miles (100/400=0.25). In this example, business mileage accounts for 25% of your total mileage.

To calculate your mileage reimbursement, you can take your total business miles and multiply them by the standard IRS mileage rate.

$0.585 * 100 miles = $58.50

Track Your Mileage The Right Way

Sure, you could do the calculations on your own, but using a mileage tracker app like TripLog will save you untold amounts of time and effort. TripLog covers all the aspects of tracking, calculating, and reporting mileage, much easier than ever before.

TripLog is the best company mileage tracking solution on the market. Download our app for free on iOS or Android today to see for yourself, or schedule a complimentary live web demo.

Is Mileage Reimbursement Considered Taxable Income?

track mileage reimbursement triplog

If you’re a mobile employee who uses your personal vehicle for work, you are probably getting reimbursed by your employer. You may be wondering if that reimbursement is taxed or if all of it goes back into your pocket.

Generally, mileage reimbursement is not taxed as income. However, there are specific scenarios when this rule can be broken. Here’s everything you need to know on whether mileage reimbursement can be taxed as income.

When Mileage Reimbursement IS NOT Taxed

Your reimbursement is tax-free under these conditions:

  • The company is using the IRS standard mileage rate (and employees qualify for reimbursement)
  • The reimbursement happens under an accountable plan

To be considered accountable, the reimbursement must be based on services done for an employer (that is to say, for business purposes). In addition, it should be adequately accounted for, and employees should return any excess reimbursement within a reasonable amount of time.

Related: IRS Mileage Commuting Rule: What Businesses Need To Know

The IRS explains the requirements for an accountable plan on its website. For more specific information related to your company type, see the appropriate page in this guide.

mileage reimbursement taxable triplog

When Mileage Reimbursement IS Taxed

If your mileage reimbursement does not meet the IRS accountable plan requirements, it will be taxed as income. Here are some specific instances where reimbursement is taxed as income:

  • If your reimbursement exceeds the IRS standard mileage rate, it is taxed as income.
  • Any excess reimbursement that employees did not return within a reasonable amount of time is also taxed as income.
  • If the reimbursement was not based on adequate records, it could be taxed as income as well.

As long as your mileage reimbursement is less than or equal to the IRS standard mileage rate and follows an accountable plan, the reimbursement will not be taxed.

Develop a Mileage Plan With TripLog

Managing your company’s mileage reimbursement process does not need to be complicated. Ditch those tedious and inaccurate pen-and-paper mileage logs for a modern solution!

Using a modern mileage tracker app is the best way to track your team’s mileage for reimbursements. Company mileage tracking has never been easier.

Download TripLog on iOS or Android, or schedule a complimentary web demo today.

IRS Mileage Log Requirements for Tax Deductions & Reimbursements

mileage log requirements for irs

If you use your personal vehicle to conduct business and plan to take tax deductions on your mileage, or you’re an employee getting reimbursed, it’s important for you to understand the necessary various record-keeping requirements. This article will discuss the IRS mileage log requirements and the best ways to log your miles.

The IRS has specific rules and regulations related to keeping track of your mileage. In addition, your employer may also have its own guidelines you will need to follow.

What Are Adequate Records As Defined By The IRS?

When it comes to keeping adequate records, the IRS’ guidelines are fairly straightforward. They include:

  • Your total business mileage
  • The total mileage accumulation for the year (business + personal)
  • The trip’s time (date), place (destination), and purpose

Best practice tip: record your activity as soon as possible. Don’t wait until later that evening or the next day.

Formats The IRS Accepts

You can use a variety of formats for your IRS mileage log. It can be a CSV, PDF, Excel file, etc. The format doesn’t matter too much.

Related: What To Do If You Forget To Track Your Miles

The most important thing is to keep accurate records. If you’re an employee, your employer will tell you what records they need and what format they should be in.

How Can I Keep Accurate Mileage Records?

To make things simpler, companies and self-employed individuals have begun to ditch manual mileage and expense logs. These manual logs can be time-consuming and tedious, as well as highly inaccurate.

Modern digital mileage tracking and reimbursement solutions like TripLog make tracking easier than ever and can export IRS-ready mileage logs. TripLog can also allow you to set custom rules, track your fleet in real-time, and reimburse with impeccable accuracy.

Is Taking an Odometer Reading Every Trip an IRS Requirement?

According to the IRS, you do not have to record your odometer readings at the beginning and end of each of your trips. The only time you have to log your odometer readings is at the beginning and end of the year (and if you start using a new vehicle).

With that said, if your employer is reimbursing you, they may have specific requirements that you will need to follow.

IRS Mileage Tracking Requirements

There are no specific requirements on how you track your mileage. The important thing is that you need to record the mileage of each trip.

For maximum accuracy, odometer readings should be taken at the beginning and end of your trips.

Related: 6 Common IRS Tax Penalties For Small Businesses

Many people choose to use pen-and-paper mileage logs, but these can often be inaccurate and time-consuming. Alternatively, you can use an accurate GPS-based mileage tracker app like TripLog.

Should You Log Personal Trips?

If you use the same vehicle for both business and personal purposes, it’s necessary that you differentiate their miles. It’s best if you present the difference as a percentage, split between personal and business miles.

The best way to manage your trips is with a mileage tracker app like TripLog. With just one simple swipe, you can easily categorize your trips as business or personal.

In addition, TripLog lets you set custom rules making the process even easier. For example, you can set the app to automatically categorize your first and last trips of the day (i.e., your commute) to personal.

record keeping irs tax mileage

How Long Records Should I Keep My Mileage Records?

In the event of an audit or something else that requires the IRS to see your records, you should have a few years’ worths of records saved. The IRS says this about keeping mileage & expense records:

“Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. A return filed early is considered filed on the due date.”

Related: IRS Mileage Commuting Rule: What Businesses Need To Know

Along with this, there may be some different rules if your employer is one of your relatives.

Should I Keep Copies Of My Records As An Employee?

For one reason or another, there’s always a chance that your employer may ask you to prove your expenses. Thus, keeping detailed and adequate records is something all mobile workers should do.

Simply put, there’s no easier method to keep an accurate record of your mileage and expenses than a modern app like TripLog. Our app keeps all of your records in one convenient place and provides you and your employer with numerous reporting capabilities.

What To Do If You Get Audited

In the event of an audit, the IRS can request mileage logs from you. You should present them in one of the formats we discussed earlier in this post.

With that said, the easiest and most accurate way to track your mileage and expenses is through an automatic company mileage tracker like TripLog. TripLog follows all IRS mileage log requirements and makes mileage tracking a breeze.

Download TripLog on iOS or Android, or schedule a complimentary web demo today!

IRS Mileage Rate Explained | How Is the Standard Mileage Rate Determined?

triplog irs mileage rate calculations

The standard business mileage rate in the United States is a yearly recommendation released by the IRS. It is used to help companies determine a fair reimbursement rate for their employees who use their personal vehicles to conduct business on behalf of their place of work.

These rates can vary depending on the year. For instance, the rate per mile for business use is up by one-and-a-half cents compared to the previous year (58.5 cents in 2022 compared to 56 cents in 2021).

Here are the 2022 mileage rates:

  • $0.585 per mile driven for business use
  • $0.18 per mile for trips that are for medical purposes
  • $0.18 per mile for moving
  • $0.14 per mile driven in the service of charitable organizations

The IRS Mileage Rate for Businesses Explained

It’s important for companies to understand that the standard IRS mileage rate is little more than a recommendation (for most states). Companies can reimburse (or not reimburse) based on whatever they deem is fair.

Related: 6 Common IRS Tax Penalties For Small Businesses

With that said, many companies choose to use the standard IRS mileage rate for simplicity purposes. In addition, offering mileage reimbursement can be a great way to attract high-quality candidates to your company.

Can You Reimburse For More than the IRS Standard Mileage Rate?

If your company chooses to reimburse for more than the recommended IRS rate, your employees will be subject to income tax on the amount earned about that rate. Let’s take an example:

The standard mileage rate for 2022 is 58.5 cents per mile, but let’s say you work in a high cost of living area. You could choose to reimburse them for more. For example, let’s say you choose to instead reimburse at 62 cents per mile.

Let’s say your employee drove 200 miles in 2022. You would take that mileage and multiply it by the standard rate:

200 * 0.585 = $117 This is the amount you would be reimbursing that’s tax-free.

200 * 0.62 = $124 This is the actual amount you gave to your employee as reimbursement.

That $7 difference would be taxed as income for your employee.

Related: 3 Reasons Why Your Small Business Needs An Accountant

You could also reimburse for less than the standard rate if you choose. However, you will need to confirm that their mileage expenses aren’t causing them to dip below minimum wage.

calculate reimbursement using irs mileage rate

Is the IRS Mileage Rate the Only Method for Reimbursement?

There are various other methods for calculating mileage reimbursements and deductions. The IRS mileage rate is one of them.

You can also choose to calculate the actual costs of operating your vehicle. Your company could also implement a fixed and variable (FAVR) plan.

How Is the IRS Standard Mileage Rate Determined?

According to the IRS, “The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile”. These costs include both fixed and variable mileage expenses.

These “fixed and variable costs” factor in just about anything a car owner can imagine will affect their wallet. Things like fuel prices, costs of maintenance, oil changes, tires, insurance, and just general depreciation are all factors that affect the IRS’ decision each year.

What Goes Into the Standard Business Mileage Rate Determination?

The IRS doesn’t release specific reasons as to why the mileage rate increases or decreases in a given year. All we know is that it relates to whatever their study claims are the costs of owning and operating a motor vehicle. However, the changes the IRS makes can seem confusing at face value.

Related: Why Small Businesses Are Vulnerable If Not Properly Tracking Mileage

For instance, while the price of gas in the United States had decreased between December 2014 and December 2015, the standard mileage rate increased by 1.5 cents. The problem with this is that there are other major factors that go into the costs of owning and operating a vehicle other than gas.

In fact, according to a study conducted by AAA, gas only accounts for about 35% of the yearly costs of owning a vehicle. As it turns out, the biggest costs come simply from depreciation, at 39%. The remaining factors make up a smaller percentage.

Properly Tracking Your Mileage

Whether you’re self-employed, an employee, or need a company mileage tracker solution, mileage tracking is extremely important. Instead of manually calculating your mileage, we recommend using a powerful mileage tracker app like TripLog.

TripLog is the best way to reduce the time and effort it takes to calculate your mileage expenses. Download TripLog for free on iOS or Android, or schedule a complimentary live web demo.

Current 2022 IRS Standard Mileage Rates

irs mileage rates 2020 2021 2022

The IRS standard business mileage rate is designed to cover the cost of workers using their personal vehicles to conduct business. Whether you’re an employee using your personal vehicle to do work on behalf of a company you work for or you’re self-employed, the IRS provides a rate for business reimbursement and tax deductions.

It’s worth noting that employers are not required to use the rate published by the IRS. However, if the employer offers mileage reimbursement for their employee that goes above the rate, the employee must pay income tax on that additional amount.

There are different rules for individuals who use their personal vehicles for business compared to those who use them for medical or charitable purposes. Please view our other pages in this guide for specific rules relating to mileage tracking for employees, employers, or self-employed workers.

IRS Mileage Rates For 2022

Beginning July 1, 2022, the standard mileage rates for vehicles, including vans, pickups, and panel trucks, are as follows:

  • $0.62.5 per mile for business
  • $0.22 per mile for medical purposes
  • $0.22 per mile for moving (used only for Armed Forces individuals on active duty)
  • $0.14 per mile for service of charitable organizations

If you want more detailed information about the standard mileage rates, you can find it on the IRS website.

Related: IRS Mileage Log Requirements for Tax Deductions & Reimbursements

calculate-irs-mileage-rate-2020-2021-2022

Previous Years’ Standard IRS Mileage Rates

The IRS standard mileage rates typically change each year, usually going up or down by a cent or two. Here are the mileage rates since 1997:

Period Business Charity Medical & moving
2022 (Jan – Jun)58.51418
2021561416
202057.51417
2019581420
201854.51418
201753.51417
2016541419
201557.51423
2014561423.5
201356.51424
201255.51423
Jul 1 – Dec 31, 2011 55.51423.5
Jan 1 – Jun 30, 2011 511419
2010501416.5
2009 551424
Jul 1 – Dec 31, 2008 58.51427
Jan 1 – Jun 30, 2008 50.51419
200748.51420
200644.51418
200540.51415
200437.51414
2003361412
200236.51413
200134.51412
200032.51410
1999311410
199832.51410
199731.51210

How to Properly Track Mileage

Proper mileage tracking is an often tedious and time-consuming process for employers, employees, contractors, freelancers, and business owners of all types. Using a company mileage tracking app like TripLog makes calculating your mileage easier and faster.

You can download TripLog’s mileage tracker app for free on iOS or Android, or schedule a complimentary web demo today.

Self-employed Worker Mileage Deduction Guide

tax deductions for self employed and business owners

If you’re self-employed and use your vehicle for work, you can deduct many mileage expenses from your taxes. These deductions can include oil changes, maintenance, repairs, tire replacements, rotations, etc.

If you use a car solely for business, you have the right to deduct all expenses related to your work. If you use your personal car for business and personal activities, it’s a bit different. You can only use the expenses associated with conducting business when taking a deduction.

Depending on how much you drive, you could be saving thousands of dollars every year!

Self-employed Mileage Guide: Get To Know the Laws and Regulations

It’s important for self-employed individuals to fully understand the rules and regulations regarding mileage deductions.

Related: Rideshare Tax Guide: What You Need To Know For 2022

Secondly, while the information within these information hubs acts as a helpful guide, it should not be taken as advice from accounting or tax professionals. You should always review the IRS website for the most accurate and up-to-date information.

In addition, you should consider checking with a tax professional to ensure that you understand all possible requirements for taking tax deductions.

calculate mileage for self employed or business owners

Self-employed Mileage Guide: Two Different Ways To Calculate Mileage Deductions

Self-employed individuals can use two different methods for calculating mileage expenses for tax deductions.

Standard Mileage Rate

If you choose to use this method, your calculations will be subject to IRS requirements. For example, as of January 2022, the standard mileage rate is 58.5 cents (or $0.58.5) per mile according to the IRS.

Actual Expenses

This is another method for self-employed people to claim deductions for business-related activities. With this method, you can list expenses like gas, repairs, insurance, maintenance, etc.

The IRS issues an updated list of what business owners and self-employed individuals can claim when using this method. You can use both methods, but it’s necessary to understand which rules should be applied to each method.

Choose the Method That’s Right for You

Keeping track of your trips and their length (in miles) is critical when using the standard mileage rate. Your deduction is based on how many miles you drive.

For those using actual expenses, keeping track of all expenses is required.

Self-employed Mileage Guide: What To Do When You Own or Lease a Vehicle

To qualify for the standard IRS mileage rate, self-employed individuals or business owners must own or lease the vehicle(s) that they use for work. The criteria for ownership and leasing are a little different.

If You Own the Vehicle

If you have your own vehicle, then you must follow these requirements:

  • During your business’s first year of operation, you must use the standard IRS mileage rate. You can switch back and forth between the mileage rate method and the “actual expenses” method for all following years.
  • There can be no claimed depreciation deductions on the car, except by the straight-line method. The mileage rate already accounts for depreciation.
  • There can be no claim of a section 179 deduction (the vehicle’s special depreciation allowance).

Related: Top 5 Must-Know Tips For Independent Contractors

If You Lease Your Vehicle

Here are the regulations you must follow if you leased your vehicle:

  • You must use the standard mileage rate for deductions during your first year of operation.
  • For all subsequent years, you should use the standard mileage rate method during the entire period the vehicle is being leased, including renewals.
  • Simultaneously using five or more vehicles for the business (i.e., fleet operations) is not allowed. It is allowed if you switch between each vehicle.
self employed individual driving car

What Kinds of Vehicles Qualify for Mileage Deduction?

Cars, vans, pickups, panel trucks, etc., are vehicles that qualify for the self-employed mileage deduction.

Self-employed Mileage Guide: How to Keep Track of Your Mileage

The IRS has some specific record-keeping requirements for mileage tax deductions. For all business-related mileage expenses, the IRS requires self-employed individuals and business owners to log the following:

  • mileage for each business use
  • total mileage for the year
  • time, place (your destination), and purpose

You’ll need to record your records at or near the time of the incurred expense. The IRS accepts methods like trip diaries, logs, Excel sheets, etc.

Related: Company Mileage Reimbursement Explained

If you are using a vehicle for both personal and business, your records should show the ratio as a percentage. This will include a log of all trips and a calculation of all the times you conducted business.

In the past, drivers have used outdated and time-consuming pen-and-paper mileage tracking methods. Today, mileage tracker apps make things significantly easier.

To make tracking your mileage for tax deductions easy, TripLog’s mileage tracker app provides a robust and sleek way for self-employed individuals and business owners to keep accurate and detailed records.

Self-employed Mileage Guide: Calculating Tax Deductions for Business Usage

Determining what percentage of your vehicle use is business or personal is very important. This calculation isn’t too complex, but examples are always helpful. Let’s take a look:

  • Let’s say you have taken ten personal trips over the course of a month, with each trip equaling 20 miles. Total personal miles within that month would come to 200 (10 * 20 = 200).
  • Within the same month, say there were three business trips taken that totaled 100 miles.
  • When figuring how much you used your vehicle for business, you can divide your business miles by the total number of miles driven.
    • Take your 200 personal miles and your 100 business miles and add them up. Here, we get 300 total miles.
    • Divide your business miles (100) by your total miles (300). Thus, you have used your personal vehicle for 33% of your total use.
  • Multiply the number of business miles with the mileage rate of 58.5 cents.
  • This example shows that the business mileage expense for this month would equal $58.50 in (100 * 0.585).

Self-employed Mileage Guide: Transportation That Qualifies for Business Deduction

There is no maximum for the number of miles you can claim for a deduction. Still, you should always keep in mind how many miles you drove for business purposes. There are various additional items to keep in mind while considering mileage deductions for business.

Related: Are You An Independent Contractor Or An Employee?

What Constitutes Business Mileage?

  • Driving between two different places of work
  • Meeting with clients or customers
  • Running errands during the workday (picking up office supplies, etc.)

What Does NOT Constitute Business Mileage?

  • Commuting to work from home
  • Carrying tools or other business items during a commute
  • Having advertising or company information displayed on your vehicle

Please visit the IRS website for additional information regarding working from home and related guidelines.

Self-employed Mileage Guide: Additional Expenses

Self-employed workers should consider that other expenses, such as parking fees, tolls, and related costs incurred when conducting business, often qualify for deductions. These costs do not qualify for deductions if you’re commuting to your place of work.

We built TripLog from the ground up to make saving money on your taxes easy. Download our app on iOS or Android, or schedule a complimentary live web demo today.

To learn more about our company mileage features, click here. Happy tracking!

Mileage Guide for Employers

mileage guide for employers

Employers with staff who use their personal vehicles to conduct business will likely reimburse their employees for travel expenses. There is no federal requirement requiring them to reimburse, but most companies usually do.

In addition, while there is no federal requirement, individual states may have reimbursement requirements that employers and business owners must follow.

It can be very beneficial for employers to have a mileage reimbursement plan in place, as these business-related expenses are tax-deductible. In addition, having a mileage reimbursement plan in place will make your company that much more attractive to prospective employees.

Employer Mileage Guide: The IRS Standard Mileage Rate

Every year, the IRS issues its standard business mileage rate. This rate is a recommendation based on an annual study of the various costs of owning and operating a motor vehicle.

Related: Manual Expense Reports: The Hidden Costs

In addition, employees should know that any amount they receive up to this amount is tax-exempt. Any reimbursement they receive over this amount is subject to standard income tax.

Employer Mileage Guide: Different Ways For Employers to Reimburse For Mileage Expenses

Functionally, there are two different ways in which your company can handle reimbursements. The first one that they can use is to reimburse for expenses incurred while using your vehicle for business.

The second and generally more accepted method is for employees to properly track and report mileage expenses. Mileage tracker apps like TripLog accurately account for the overall costs associated with owning and operating a motor vehicle.

In the past, companies have used outdated pen-and-paper mileage tracking methods. However, these methods can leave your company subject to over-reimbursement and other types of fraud.

triplog mileage guide for companies with mobile employees

If you choose to use the second method, you will likely use the standard IRS mileage rate. Anything at or below that IRS-recommended mileage rate can be reimbursed to your employees tax-free. Anything over the amount is considered income and is subject to federal and state income tax.

Employer Mileage Guide: Mileage Allowance

Using a mileage allowance system is another option for employees. This is an allowance that is usually paid to the employee in advance, generally paid at the beginning of each month.

This system is designed to cover any transportation expenses that an employee might incur. This can be a challenging reimbursement method as it requires you to manage how much you’re providing with significant scrutiny on your end.

Related: 3 Ways SMBs Can Save Money (And 3 Ways They Lose Money)

Don’t forget! If the allowance total given to the employee is higher than what the IRS standard mileage rate is, the average must be reported as income rather than reimbursement.

Employer Mileage Guide: Mileage Reimbursement

Mileage reimbursement is a fairly straightforward process. With that said, there are a few varieties that are worth discussing. The first one is using the standard mileage rate. The second one is using FAVR (fixed and variable rate).

Employer Mileage Guide: Using the Standard Mileage Rate

The standard mileage rate is one of the easiest ways of tracking and reimbursing employees who use their personal vehicles for work.

Employers should keep in mind that (in most states) they are not required to use the IRS standard mileage rate and that they may use their own rate. If this is the case, any additional reimbursement made to the employee above the IRS rate is subject to income tax.

Thus, it’s important to keep the IRS rate in mind if you choose to use your own mileage reimbursement rate. In addition, if your reimbursement (or lack thereof) causes the employee to fall below minimum wage, you will need to pay them the difference.

Employer Mileage Guide: Fixed and Variable Rate (FAVR)

If you feel like the IRS standard mileage rate is too simplistic or not fair for your particular region, there are other options. For example, you can set up a fixed and variable rate (FAVR) plan.

  • The fixed rate is used to cover standard month-to-month costs such as insurance, lease payments, depreciation, etc.
  • The variable rate covers variable costs such as gas, maintenance, and oil changes.
employer mileage reimbursement plan

Employer Mileage Guide: Employers Should Have An Accountable Plan

To ensure the amount you’re properly reimbursing your team, you must meet the requirements of an accountable plan. The rules of an IRS-compliant accountable plan are as follows:

  • Any expenses must have a business connection – that is, your employee incurred deductible expenses while performing services on behalf of your business.
  • They must adequately account for these expenses to you within a reasonable period of time.
  • They must return any excess reimbursement or allowance within a reasonable period of time.

Each trip that qualifies to be reimbursed must be recorded by the employee and noted for a business purpose in their mileage logs. Also, recording each transaction’s receipt makes reimbursement that much simpler.

Using a powerful mileage and expense tracker like TripLog is a great way to ensure accurate reimbursements. For instance, TripLog’s OCR capabilities give your employees an easy way to track their receipts.

In addition, the IRS indicates that a “reasonable period of time” should be used to track, submit, and manage mileage expenses between an employer and employee. The timeframe suggested by the IRS is 120 days. Specifically, the IRS states on their website:

  • Employees must receive an advance within 30 days of the time they have an expense.
  • They must adequately account for their expenses within 60 days after they were paid or incurred.
  • They return any excess reimbursement within 120 days after the expense was paid or incurred.
  • They are given a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding advances. They must comply within 120 days of the statement.

Are There Any “Non-Accountable” Plans?

Any reimbursement method that does not meet the three rules provided by the IRS does not meet the requirements of an accountable plan. The IRS provides additional guidelines here to help explain how employers and employees should account for reimbursable expenses.

Employer Mileage Guide: All Employees May Not Be The Same

Since there are differences among employees in most companies, the IRS standard mileage rate requires that each employee qualifies individually. Records must be properly kept in order to meet the requirements of an accountable plan.

Companies should have someone that looks after the total business mileage incurred by their employees. To review the requirements for employees, you may refer to our employee mileage guide for more information.

Your One-Stop Mileage Shop

The easiest and most cost-efficient mileage reimbursement method is to use a company mileage tracker like TripLog. To learn more about how TripLog can help your company, schedule a complimentary demo request today!

Mileage Guide for Employees

best mileage reimbursement platform for mobile employees

If you’re employed by a company and use your personal vehicle for work, your employer will likely be reimbursing you for your mileage and expenses. You may receive mileage reimbursement if you’re driving from the office to meet clients, pick up office supplies, or doing anything else work-related.

Employees may have some questions about whether they qualify for any reimbursements from their employer or not. Click here for information on mileage log requirements.

  • If I drive a company car, will mileage reimbursements be provided?
  • If I use my own vehicle for business purposes, will my employer provide me with reimbursements?
  • What is the best way to track my mileage?
  • Should I do mileage expense reporting each year for tax purposes?
  • What qualifies as company-related mileage expenses?

Related: Are You An Independent Contractor Or An Employee?

Employee Mileage Guide: I Drive a Car Provided by My Employer

If your employer provides you with a vehicle for work-related purposes, you are usually not eligible for mileage reimbursement. You more than likely will not need to track your mileage or expenses (unless the company wants you to for internal data purposes).

You may be reimbursed for certain expenses, like gas, parking, or tolls, but you won’t be reimbursed the same way as if you used your personal vehicle. The standard mileage rate includes the cost of operating a vehicle, which doesn’t fall on you if you’re not using your own car.

The specifics of how your company should reimburse you for expenses incurred while operating a company vehicle should be made clear to your employer.

employee driving company car track expenses

Employee Mileage Guide: I Drive a Car Owned or Leased by Me

If you drive your own car while conducting business for your employer, you are eligible for reimbursement. Typically, your employer will use the standard IRS mileage rate.

However, your company may choose to implement other methods as well. Regardless, you will need to track your mileage to ensure accurate reimbursements.

Related: 4 Best Tips For Road Warriors (2021)

For decades, employees have had to use inaccurate and time-consuming pen-and-paper mileage tracking methods. Today, powerful mileage tracker apps like TripLog make the process significantly faster and easier.

accountable plan irs mileage tracker

Employee Mileage Guide: The Importance of Employee Mileage Tracking

Recording each trip used for business purposes that qualify for reimbursement is important. There are various tools available that are affordable and easy to use. One of the best examples of such an expense management tool is TripLog.

Finally, the IRS indicates that companies must offer a “reasonable period of time” to track, submit, and manage mileage expenses between an employer and employee. The IRS states these points on their website:

  • You receive an advance within 30 days of the time you have an expense.
  • You adequately account for your expenses within 60 days after they were paid or incurred.
  • You return any excess reimbursement within 120 days after the expense was paid or incurred.
  • You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances, and you comply within 120 days of the statement.

Related: How Employees Working From Home Deduct Their Mileage

Employee Mileage Guide: What Counts As a Reimbursable Expense?

Actions such as driving to meet prospects or close sales deals, managing company printing at the print shop, or other company-related activities usually qualify for reimbursement if an employee uses their own personal vehicle.

With that said, some activities, such as commuting to work from home, driving to and from lunch, or picking up a friend in the middle of the workday are not meant to be reimbursed by an employer their employee. Thus, employees must accurately track their drives and be able to easily differentiate business and personal trips.

TripLog: The Best Way To Track Mileage

TripLog’s mileage and expense tracker is one of the easiest and most cost-efficient methods for tracking mileage expenses. With just one swipe, drivers can easily classify their trips as business or personal!

In addition, the app begins tracking your mileage as soon as you start driving. Say goodbye to outdated methods that require you to pull out a pen and paper.

Employers can also set up various reimbursement plans via our intuitive dashboard. Download the #1 company mileage tracker for free today on iOS or Android, or set up a complimentary live web demo.

IRS Mileage Guide

irs mileage reimbursement guide

What Is Mileage Reimbursement?

Mileage reimbursement is when an employer offers employees monetary reimbursement if they use their personal vehicle on behalf of the business. If you’re an employee, an employer, or a self-employed worker, understanding how mileage works is important and can help you save thousands of dollars every year.

Please find the section you need in the sidebar to the right.

Every year, mobile workers track, report, and submit tax returns. To do this accurately, you’ll need to understand the various changes that come year to year.

You need to ask your accounting professional or CPA the right questions when tax time is rolling around. In order to ensure you’re getting reimbursed accurately, you will need IRS-compliant mileage logs.

triplog best mileage reimbursement software for companies

Trust the Experts at TripLog.

As the market’s foremost mileage experts, we have designed this information hub to help answer all of your pressing questions regarding mileage:

  • What are some mileage reimbursement methods (FAVR, IRS rate, etc.)
  • What are the differences between mileage rate reimbursements and income?
  • Should reimbursements be provided to employees? If so, how should they be done?
  • How should I track and calculate my mileage?
  • Should I use a mileage tracker app or pen-and-paper?
  • How do I know about the current mileage reimbursement rates?
  • How does the IRS determine the current mileage reimbursement rates?
  • Are the federal mileage reimbursement rates the same for any given activity?
  • What are the specific requirements for tracking, reporting, and calculating mileage rates?
  • What is the need for a mileage log in the first place?

Tracking mileage for your company and following the proper IRS regulations can save you money come tax season. It can also help substantiate the use of company vehicles by employees to avoid tax deductions and can allow you to take care of reimbursements as businesses expenses.

We have tailor-made this resource for business people, employers, employees, and those who are self-employed. We believe it will be very useful to help you find all the information for your mileage logs, reimbursements, and expense-tracking needs.

If you have any further questions about mileage rate reimbursements, please don’t hesitate to contact us! If you want to learn more about TripLog and how it can help your company save, schedule a complimentary demo request.

Common Tax Deductions To Plan For In 2022 | Best Tips For Maximizing Deductions

common tax deductions for 2022

With taxes due less than a month away, we thought we’d give you some final tips. If you haven’t filed your taxes already, here are some tips on what you can and cannot deduct.

Less traditional businesses like real estate, freelancing, or rideshare drivers may have unique deductions that they could also be capitalizing on. The key is to maximize deductions while minimizing tax exposure.

Related: Company Mileage Reimbursement Explained

For many, the challenge is that they are not aware of what deductions they qualify for. They also might not know how exactly to take them. We’ll look at some common deductions and general recommendations on how to take advantage of them.

It’s important to note that you should consult your tax advisor or CPA for questions on your specific tax situation.

Deductions for Real Estate

You will most likely be subject to property taxes if you own fixed property, either as a homeowner, landowner, or owner of an office building. In most cases, state and local governments levy property taxes based on the property’s value.

These taxes are usually deductible on federal tax returns and can lessen your tax burden. Entrepreneurs should stay updated about caps associated with real estate tax deductions due to the Tax Cuts and Jobs Act of 2017.

The cap for this deduction in 2022 is $10,000. For real estate purchased in 2022, property tax deductions are only allowed for the period in which you own the property.

If you don’t own any property but paid any real estate taxes as an “equitable” owner, you may be able to deduct real estate taxes paid on that property. An equitable owner is one who has the economic benefit and burdens of ownership.

Related: 10 Most Common Tax Deductions For Small Business

If Airbnb hosts paid taxes on a given property, they could deduct the percentage of the space used as a rental on Schedule E of their tax returns. Itemization of personal taxes may include the ability to deduct the remaining part of their property tax paid on Schedule A.

Deductions for Home Office

COVID-19 has forced many companies to require their employees to work from home. If you’re one of the thousands who have turned a room in their home into an office, you can take the home office deduction.

Individuals working out of a home office dedicated only to their business can deduct a part of their home expenses. You can take a $5 per square foot deduction for each square foot of their home used for business purposes, up to 300 square feet.

Or, you can track home expenses, such as real estate taxes, repairs, maintenance, etc., and take a part of those expenses as a deduction. Expenses that only benefit the home office are 100% deductible as a business expense.

Deductions for Sole Proprietors

Businesses set up as sole proprietorships are easy to set up and maintain. The only thing a sole proprietor needs to do to begin work is to start working. Despite its simple structure, there are some disadvantages.

Related: Top 5 Tax Tips For Gig Economy Workers In 2022

For one, the individual is liable for business issues rather than having the protection of a corporation. Also, the sole proprietor pays taxes at the personal income rate.

Furthermore, the sole proprietor has to pay extra self-employment tax, such as Social Security and Medicare. The Tax Cuts and Jobs Act of 2017 allows a business income deduction to lower the tax burden.

That deduction can be up to 20% after deducting business expenses dependent on the business nature and taxable income. One benefit of being self-employed is that you only have to file a single return. You won’t need to file separate personal and business returns.

common irs tax deductions 2022

Deductions for Independent Contractors

Whether the business is a sole proprietorship or a corporation, independent contractors should follow the appropriate tax guidelines. Deductions for sole proprietors are outlined above. For others, it will depend on whether the business is set up as a corporation, LLC, or partnership.

If you are hiring independent contractors, it’s suggested you request they complete a W-9 to ensure you have the necessary information to issue a 1099 at the end of the year. You can deduct payments to independent contractors in several different ways depending on the nature of the work.

Related: Top 5 Must-Know Tips For Independent Contractors

This may include different lines of your Schedule C or your Schedule E. For example, you can deduct payments made to an accountant on line 17 of your Schedule C and payments that were made to a graphic designer on line 11.

Meal and Per Diem Deductions

The per diem rate is a fixed amount paid to an employee or individual to compensate for expenses incurred while traveling on business. This is used rather than tracking specific or actual expenses incurred.

For employees of companies, the per diem can include meals, lodging, and incidentals. For sole proprietors and the self-employed, the per diem only applies to meal expenses and incidentals, not traveling expenses such as lodging.

This means that you must still keep records for those other expenses. It’s also worth noting that the per diem rate must be multiplied by 50% for each day. An exception would be actual travel days where the per diem can be multiplied by 75% of the rate.

The per diem for sole proprietors and the self-employed varies, depending on the location and sometimes the industry. For example, the standard per diem for most states is $96 for 2022. The per diem can be much higher for high-cost areas, such as $298 for New York City, $302 for San Francisco, and $256 for Washington, D.C.

Deductions for Mileage

The IRS provides a mileage deduction rate for companies and individuals who use their vehicles for work. For individuals such as freelancers, rideshare drivers, and sole proprietors, the IRS standard mileage rate might be easier to use than tracking every expense associated with your automobile.

Related: Rideshare Tax Guide: What You Need To Know For 2022

The 2022 standard mileage rate is 58.5 cents per mile.

Deductions Not Allowed

While there are many deductions available to entrepreneurs, the IRS does not allow certain expenses as deductions. For example, any illegal expenses, fines, penalties to a government agency, lobbying expenses, and certain business assets such as cars or equipment are not deductible.

There are a variety of deductions available for those working outside the more traditional employer-employee relationship. We recommend that you consult with your tax advisor or CPA to ensure compliance with all applicable tax requirements.

Conclusion

Whether you’re an enterprise-scale corporation or a small business needing to track their team’s mileage, using an automatic mileage tracker app will save you thousands of dollars and countless hours of labor.

The best way to automatically track and manage your deductible mileage is with an automatic mileage tracker app like TripLog. Download the app on iOS and Android, or schedule a complimentary live web demo today.