Since work-related travel is a standard business occurrence, mileage reimbursement is a way to lump everything together and create a more efficient way to compensate employees and cover that cost.
Mileage reimbursement can be submitted for work-related travel outside of an employee’s daily commute. This includes driving to client meetings, company training, traveling to a different office location, and running errands for your employer. The miles an employee drives to work and back home cannot be included. In addition, those miles will be subtracted from the overall miles driven. For example, if an employee drives to an office 30 miles away from their house but their normal commute is 20 miles, they will get paid for that additional 10 miles each way.
Most companies will have a reimbursement form and schedule that must be followed to meet guidelines and get paid. Employees need to use the form and track mileage accurately. There is also typically a time frame that is allotted for employees to submit their reimbursement forms. If too much time passes, reimbursement may no longer be an option.
It is important to note that mileage reimbursement can be included in gross income for tax purposes if the company’s mileage reimbursement policy exceeds the standard rate of the IRS. The standard mileage reimbursement rate is regulated by the IRS and goes up every year or two. The increase considers inflation, increase in fuel prices, and cost of living. In 2023 the mileage rate increased to 65.5 cents per mile for work-related driving.
The biggest factor with mileage reimbursement is staying consistent and turning in the report. While it might seem tedious, it adds up.