Your employer's mileage reimbursement rate might be the same as that of the IRS, but a company can choose a different reimbursement method or to not reimburse you at all. If you receive a partial reimbursement or no reimbursement for the use of your personal vehicle to conduct business on behalf of your employer, you may claim the unreimbursed portion as an itemized deduction.
Mileage Reimbursement Basics
Businesses are not required to use the IRS standard mileage reimbursement rate to reimburse mileage expenses. In fact, a business is not obligated to reimburse employee mileage at all. If a business does reimburse employees for mileage under a method other than the IRS standard mileage rate, it must maintain documentation of expenses to justify the reimbursement as a business expense. The cost of gas, parking tickets, tolls and even a percentage of car maintenance, insurance and registration fees may all be reimbursed and written off by the business.
IRS Standard Mileage Rate
In lieu of maintaining records for a variety of vehicle expenses, the IRS allows a business to simply use the IRS standard mileage rate deduction. The IRS standard mileage rate is designed to cover the average cost of gas, car depreciation, maintenance, registration fees and insurance. To comply with the IRS under this method, the business must maintain records of how many miles each employee drives for business purposes each month. It also must verify the business purpose of each trip.
Mileage Reimbursements to an Employee
As long as your employer reimburses you under an accountable plan, reimbursements aren't considered taxable income. To be an accountable plan, there must be a business connection for the expense and you must document the expense and return any excess reimbursement received. Your employer may then classify the payment as a reimbursement. Otherwise, your employer must list the payment as wages on your Form W-2.
Employee Business Expense Deduction
If you aren't reimbursed or are only partially reimbursed you may be able to claim a tax deduction. You may deduct unreimbursed employee business expenses on Form 2106. Expenses -- minus any reimbursements -- incurred for work qualify as a deduction. You can use either the IRS standard mileage rate or calculate actual expenses to figure the deduction. However, miscellaneous itemized expenses, such as employee business expenses, are only deductible after they exceed 2 percent of your adjusted gross income.
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