What Is Required by Companies for IRS Mileage Reimbursement?
To reimburse you for miles that you drove on your personal vehicle for work-related excursions, most companies need documentation detailing the time, place, purpose and length of each trip. This information enables them to verify your claims and also provides them with documentation in case they are audited.
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Mileage Reiumbursement Purpose
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The IRS mileage reimbursement rate is a standard that the agency allows for companies claiming tax deductions based on payments made to employees for work-related use of their personal vehicles. Employers may pay employees up to this amount and use these payments to offset business income for tax purposes. The standard mileage reimbursement rate protects employees from employers who are unwilling to compensate them fairly for auto mileage, and it protects the federal revenue agency from employers trying to claim unreasonable vehicle expenses.
Mileage Log
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To legitimately claim mileage reimbursement expenses, a company will require employees to keep mileage logs detailing work-related uses of personal vehicles. An employee should use his mileage log to record his odometer mileage at the beginning of a trip as well as his mileage at its end. He should then subtract the starting mileage from the ending mileage to calculate the number of miles driven for the particular trip. He should also note the date as well as the destination.
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Mileage Reimbursement Rates
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At the beginning of each year the IRS announces its standard mileage rate, which employers will use to reimburse employees for work-related use of their cars. The same rate applies to employers writing off miles driven with company vehicles. The agency bases its standard rates on research about the average cost of owning and operating a vehicle, including gas, insurance, repairs and maintenance costs. The IRS may adjust the standard mileage rate in the middle of a year, as it did in 2008, when the price of gas rose dramatically. As of 2011, the standard mileage rate is 51 cents per mile.
Limitations
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The standard mileage rate is intended to cover a vehicle's general operating expenses, including gas, insurance, repairs and maintenance. It does not cover parking fees and tolls, which employers should reimburse separately. Employer payments to employees and employer tax deductions based on the standard mileage reimbursement rate do not cover commuting miles or miles driven between an employee's home and his workplace. Each employee must drive these miles at his own expense.
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References
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