Should i get mileage reimbursement

Many businesses struggle with employee mileage reimbursement in Learn about the modern and easy way to manage your mileage program. From employee benefits and vehicle needs to compliance and tax implications, there's more than one factor that could make a program the more cost-effective and efficient choice for your company. A successful marketing plan relies heavily on the pulling-power of advertising copy. Writing result-oriented ad copy is difficult. What Are the Mileage Reimbursement Rates?

The IRS sets this rate for two reasons: To provide employers a fair rate for compensating their employees when they drive their own personal vehicles for work-related purposes. How to Reimburse Employees for Company Mileage? Interested in learning more? Team Everlance We help people save time and money.

See All Posts. More from Our Blog. Vehicle Programs. Should You Dispose of Your Fleet? Posted on. Team Everlance. Reimbursement From employee benefits and vehicle needs to compliance and tax implications, there's more than one factor that could make a program the more cost-effective and efficient choice for your company. Subscribe to our Newsletter. Solutions Self-employed Business.

Contact Us support everlance. Copyright Everlance. Mileage reimbursement is when an employer compensates an employee for the work-related miles they commute in their personal vehicle.

The reimbursement rate, payment terms and process all depend on the employer and their agreement with the employee. The following professions might receive mileage reimbursement:. Related: 11 Popular Travel Jobs. Receiving mileage reimbursement can depend on several factors. If you are considering requesting mileage reimbursement, consider the following aspects: eligibility, standard rates and employer requirements. Employees who use their personal vehicles for company purposes may be eligible for mileage reimbursement.

However, this does not mean all employees are eligible. Independent contractors who work for rideshare and delivery companies are not usually reimbursed for mileage. An employee who is paid a salary, however, may be eligible for reimbursement depending on the details of their work contract.

Whether or not you qualify for mileage reimbursement will depend on the details of your employment. In most cases, this reimbursement agreement is discussed ahead of time and the employee is aware of how much they will receive for each mile when they are hired. Standard reimbursement rates are set by the IRS. This rate is a base reimbursement rate for employers. While many businesses choose to follow the standard rates, it is not a legal requirement. Your employer can offer reimbursement that is less or more than the federal standard rate.

It is always up to the employer to decide which costs they will and will not cover. Generally, the following costs are included when reimbursing mileage:. It is important to discuss the expectations of your job when discussing mileage reimbursement rates. Some tasks, like transporting customers, will require you to keep up with routine maintenance of your vehicle. Other tasks, like traveling to the occasional business conference, do not put as much wear and tear on the vehicle. Although employers are not required to offer mileage reimbursement, it can be used to negotiate a compensation package.

The ability to adjust reimbursement rates can be a great way to attract high-quality employees. When unemployment rates are low, it can be difficult to attract qualified candidates.

Exceeding the federal standard rate can be translated as additional income. Geographic data is king. Understanding the typical driving costs for your region can help you determine a fair rate that will cover employee expenses as required by law without overcompensating staff and incurring additional taxes. Tracking mileage and vehicle costs on a driver-by-driver basis gives you a more accurate picture of individual expenses.

Reimbursing based on individual drivers, rather than extending a flat rate on a monthly basis, can help you manage reimbursement costs and avoid additional taxes. Some software, like Motus' mileage reimbursement application, can eliminate over-reporting of mileage by your drivers and make documenting your mileage reimbursement easy. She added that "people are not necessarily lying or trying to cheat the system," but often just rounding up to the nearest mile.

Employees should clearly understand your reimbursement rate and policy, including when expenses will be reimbursed and to whom they should send expense reports.

Software can automate some of the process, automatically sending mileage reports to supervisors for approval. Clearly state the payment method of reimbursement as well — for example, will it be added to an employee's paycheck each cycle? By using data to determine the optimal rate and leveraging software to track your drivers' activities, you can establish an efficient and appropriate mileage reimbursement policy.

This will keep you in compliance with legal requirements without hurting your company's bottom line. Key takeaway: Leverage software solutions that use data-driven insights to streamline your mileage reimbursement policy and set optimal rates. Do employers have to pay mileage reimbursement to employees?

Adam Uzialko. Learn about the laws surrounding mileage reimbursement so you can create a company policy that meets state and federal regulations. Employers are not federally required to reimburse employees for mileage and vehicle costs, but state laws may apply in some jurisdictions. Mileage reimbursement is federally required when failure to reimburse would decrease an employee's net wages below minimum wage; otherwise, businesses could be open to lawsuits and financial penalties.

While this rate is useful for tax purposes, use a fixed and variable rate FAVR program to determine a fair and efficient reimbursement rate by geography. This article is for small business owners who want to establish a fair and efficient reimbursement policy for mileage and vehicle costs employees incur when driving for work-related purposes. What is mileage reimbursement? How does mileage reimbursement law work? Employment law related to mileage reimbursement On the federal level, there is no requirement for employers to reimburse employees for mileage when using personal vehicles for company purposes.

Tax law related to mileage reimbursement Mileage reimbursement is tax deductible for employers and independent contractors. Collect relevant data based on geography. Track mileage and vehicle costs by driver.

Use automated solutions to track mileage. Communicate your policy clearly. Business News Daily Staff. Adam Uzialko is a writer and editor at business. He has 7 years of professional experience with a focus on small businesses and startups. He has covered topics including digital marketing, SEO, business communications, and public policy. He has also written about emerging technologies and their intersection with business, including artificial intelligence, the Internet of Things, and blockchain.