Section 8 – Calculating Mileage for Reimbursement

Calculating your mileage for reimbursements shouldn't be difficult - and with TripLog, it's never been easier!
calculate mileage for reimbursement

As you probably already know, calculating mileage reimbursement is a relatively straightforward process, but it is important to understand whether or not you are qualified for the reimbursement you are trying to get. Furthermore, if you are qualified for mileage reimbursement, you must follow the guidelines that are provided in the other areas of this information hub. Along with this, you must also focus on the details of the mileage reimbursement information provided by the IRS.

Another fact that needs to be mentioned is that sometimes an employer may make the use of a completely different mileage rate than the one which has been published by the IRS. If this happens, it must be known by everyone that any reimbursement given that exceeds the IRS rate will be considered as income and hence will be taxable.

How To Use The Mileage Rate

When determining how much a reimbursement should be for the use of personal vehicles by employees, those who are self-employed, and business owners for various company or business purposes, one must make use of the IRS standard mileage rate.

Below is an example of how to properly make use of the mileage rate. In the example, one must record the fact that they have used their personal vehicle and driven 200 miles for performing a particular business activity. The standard mileage rate for 2020 was 57.5 cents per mile, so the equation that can be used is as provided below:

● reimbursement amount = miles * rate

● 200 miles * 57.5 cents = $115.00

calculate mileage with irs regulations

As another example, let’s say that you’re using the personal vehicle of your employer for a work-related purpose and have driven the same 200 miles. In such a case, since there is no standard mileage rate applied here (as you’re using the vehicle of your employer) but you’re paying the amount to operate it (for example, gas, maintenance, etc.), the mileage reimbursement rate is 21 cents per mile by the employer. The equation used will be the same, but the total reimbursement will be different.

● reimbursement amount = miles * rate

● 200 miles * 21 cents = $42.00

From the above two examples, the conclusion comes that there is a higher reimbursement amount as a result of driving one’s own vehicles for business-related activities, but operating your own vehicle will be higher comparatively.

When Using Your Vehicle For Both Business and Personal Use

When you’re using your own personal vehicles for both business or personal use purposes, it is important for you to understand the need to segregate the mileage that has been used. This allows you to know what to claim for depreciation and other costs related to operating the vehicle. Below is an example of the proper calculation. Let’s take a look at another example.

Let’s say that you’ve driven 200 miles in your vehicle for a personal trip. Within that same period, you’ve also driven a total of 100 miles for business. You can calculate the percentage of how many business miles you’ve driven by dividing the business miles by the total miles (100/300=0.33). The result is 33%, the percentage by which you can calculate the total miles of the vehicles to arrive at the amount used for business.

In addition, further calculations show that 0.33 x 300 miles = 100 miles. Next, 100 miles * $0.575 = $57.50 for your total mileage reimbursement.

Sure, you could do the calculations on your own, but using a mileage tracking solution like TripLog to track your mileage 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 can be easily used by employers, employees, the self-employed, business owners, freelancers, independent contractors, and rideshare drivers. Download our app for free on iOS or Android today to see for yourself!

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Mileage Reimbursement Savings Calculator

Using outdated manual mileage logs can cost businesses thousands of dollars per year in lost time and incorrect reimbursements. See how much TripLog can help you save!

Number of drivers

Average miles daily per person​

Number of trips daily

Cents-per-mile

Annual mileage reimbursement costs based on the numbers you provided.

Annual Mileage Reimbursement

50 mi/day x 100 drivers x $0.54 (5 days x 50 wks)

$675,000

This is the inline help tip! You can explain to your users what this section of your web app is about.

According to research, on average employees inflate the mileage by 25% when self reported.

Estimated Reimbursement Savings

25% x Annual Mileage Reimbursement

$168,750

People on average spend 2 minutes on manually recording trips.

Manual Entry Hours

2 mins x 10 trips/day x 100 drivers (5 days x 50 wks)

8,334 hr

Taking national average $25 hourly rate.

Estimated Labor Savings

Avg. $25/hr x Manual Entry Hours

$208,334

Total Savings Per Driver

(Labor Savings + Reimbursement Savings) / Number of Drivers

$4,167