Section 8 – Calculating Mileage for Reimbursement

As we know that calculating mileage reimbursement is relatively a straightforward process but it is mandatory to understand if you are qualified for reimbursement of mileage or not. 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 or 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 if any reimbursement given exceeds the IRS rate will be considered as income and hence it becomes taxable.

How To Properly Use The Mileage Rate?


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

Here, we are providing you an example that how to properly make the use of the
Mileage rate. One must record the fact that he/she has used his/ her personal vehicle and driven 200 miles for performing a particular business activity. The standard mileage rate for 2020 is 57.5 cents per mile, so the equation that can be used is as provided below:-

reimbursement amount= miles* rate

200 miles x 57.5 cents = $115.00

One more example: If you’re using a personal vehicle of your employer for the work- related purposes and have used the same 200 miles. In such cases, 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. Here, also the equation used will be the same, but the total reimbursement is different.

miles x rate = reimbursement amount

200 miles x 21 cents = $42.00

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

When Using Your Vehicle For 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 in a better way what to claim for depreciation and the other costs related to operating the vehicle. Below, we are providing you an example for the proper calculation. Let’s have a look at this:-

If you’ve made the use of 200 miles by driving your vehicle for a personal trip and also within the same period, you’ve also driven a car and covered the total of 100 miles for business, then you can do the computation by dividing the business miles by the total miles (100/300=0.33). Here, we get the 33% result, or the percentage by which you can calculate the total miles of the vehicles to arrive at the amount used for business.

In addition, further calculation would show that 0.33 x 300 miles = 100 miles. Next, 100 miles x $0.575 = $57.50 total mileage reimbursement.

When we do the proper calculation of mileage for business as a purpose of reimbursement with the use of a helpful solution such as by making the use of the best app for tracking mileage like TripLog. It will cover all the aspects of tracking, calculating and reporting mileage much easier than before. TripLog can be easily used all- employers, employees, self- employed, business owners, freelancers, independent contractors and also rideshare drivers.

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Mileage & Expense Tracking and Reimbursement


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